Not only the United States, but Europe is also full of credit "cockroaches"!

Question: How will the Altice lawsuit against AI affect lender cooperation?

Protection mechanisms in the credit market are collapsing simultaneously across two continents. JPMorgan Chase CEO Jamie Dimon warned last year that issues in the credit market would not be isolated incidents—“seeing one cockroach often means there are more behind it.” Now, this judgment is being confirmed in Europe.

According to The Financial Times on Tuesday, as a series of high-profile European borrowers such as Altice, Ardagh, and Victoria initiate “liability management exercises” (LME), the fragility of the European credit market can no longer be concealed.

More notably, Altice’s US operations, Altice USA, recently sued major creditors including Apollo, Ares, and BlackRock in the U.S. District Court in New York, accusing their cooperation agreements of constituting an “illegal cartel.” If successful, this lawsuit could fundamentally weaken lenders’ ability to coordinate for self-protection and may serve as a legal precedent for European borrowers to follow.

For investors, this means that the legal terms in credit documents have shifted from technical details to core risk variables. In a market environment where protective clauses in loan agreements are increasingly relaxed, those who can read and understand the documents hold the advantage.

European LME Wave: Borrowers’ Full-Scale Offensive

Over the past two years, the European credit market has experienced a wave of intense LMEs. Borrowers such as Altice France, Altice International, glass packaging giant Ardagh, UK flooring manufacturer Victoria, Swiss vending machine operator Selecta, and Dutch lingerie retailer Hunkemöller have all initiated liability management exercises between 2023 and 2025.

The essence of LME is that borrowers restructure their balance sheets through legal and financial engineering—transferring valuable assets outside the scope of creditor claims, or replacing old debt with new debt, bypassing original contractual restrictions, and forcing lenders to accept “haircuts” rather than recovering principal at maturity.

The root cause of this phenomenon lies in the bargaining power accumulated by borrowers after the 2008 financial crisis—management and owners leverage their negotiating advantage to secure increasingly lenient terms in loan agreements, while lenders, under competitive pressure, keep conceding.

Since 2023, lenders have begun to fight back against this offensive, mainly using two tools: first, inserting “blocker provisions” in contracts to explicitly prohibit certain types of LME transactions; second, signing “co-operation agreements” to coordinate among lenders and prevent borrowers from breaking through individually. The combination of these tools has proven effective—but it has also triggered strong counterattacks from borrowers.

Altice Lawsuit: A Legal Battle That Could Rewrite the Rules

The latest move by Altice’s billionaire owner Patrick Drahi has escalated this game. According to The Financial Times, Drahi persuaded JPMorgan Chase to provide refinancing loans for Altice USA (its Optimum Communications business), thereby lifting the original strict protections for lenders and releasing some valuable assets—an essential step in managing the group’s $26 billion debt pile. The new loan from JPMorgan explicitly includes anti-cooperation clauses, which also bind any future transferees of the loan.

Drahi did not stop there. Altice USA immediately filed a lawsuit in the U.S. District Court in New York against major creditors including Apollo, Ares, and BlackRock, accusing their cooperation agreements of constituting an “illegal cartel” that excludes the company from the U.S. leveraged finance market.

The potential impact of this lawsuit extends far beyond Altice itself. If the court rules that cooperation agreements are anti-competitive, the core tool of lender coordination and self-protection will be undermined, significantly reducing borrowers’ resistance to LMEs. More concerning, if Altice wins in the U.S., European issuers are likely to introduce similar legal arguments into their local judicial systems, further eroding the defensive space for European lenders. Even if Altice loses, the fact that borrowers are willing to incorporate anti-cooperation clauses into new loan documents indicates that this trend is hard to reverse.

As Sabrina Fox, founder of Fox Legal Training, pointed out, the weakening of lender protections has irreversibly changed the landscape of the credit market. In this endless game, those who can accurately interpret legal documents—especially the lawyers who drafted those lenient clauses—are the true winners.