A large group of lenders to Optimum Communications, Inc. subsidiary CSC Holdings, LLC filed a lawsuit in the Supreme Court of the State of New York, New York County, seeking to unwind a series of liability management transactions that they allege stripped existing creditors of guarantees and collateral tied to the company's Cablevision assets and subsequently transferred value to Optimum shareholders and insiders. The 165-page complaint, Index No. 655437/2026, was filed by a group that includes funds and CLOs managed or affiliated with Apollo, Oaktree, Arini, D.E. Shaw, GoldenTree, JPMorgan and PGIM, among others. Defendants include CSC Holdings, Optimum Communications, Cablevision Systems Corp., controlling shareholder Patrick Drahi, former Optimum CEO Dexter Goei and a number of current and former directors, officers and related entities.

The lawsuit comes as Optimum works through a significant maturity wall. CSC Holdings and its subsidiary guarantors have more than $21 billion of debt, according to the complaint, including approximately $6.2 billion scheduled to mature in 2027, and Optimum has disclosed substantial doubt about its ability to continue as a going concern absent a comprehensive restructuring capable of addressing its near-term maturities. As of June 30, 2025, before the transactions challenged in the complaint began, the CSC obligor group had approximately $23.7 billion of funded debt, including approximately $6.875 billion under its credit agreement, $10.71 billion of senior guaranteed notes and additional unsecured debt. Pasted markdown

The fight largely comes down to what happened to the Cablevision assets that had historically supported billions of dollars of CSC debt. Optimum's network includes the legacy Cablevision business in the greater New York City area, New Jersey and Connecticut and the legacy Suddenlink business concentrated in Texas, Oklahoma, Arkansas, Louisiana, West Virginia and other markets. Before the challenged transactions, subsidiaries holding the Cablevision assets guaranteed CSC's obligations under its credit agreement and senior guaranteed notes, while equity interests in those subsidiaries were pledged as collateral for the CSC term loans. The lenders allege that a series of transactions beginning in July 2025 moved substantially all of those assets outside the original CSC restricted group. Optimum's own reporting cited in the complaint indicates that the Cablevision assets moved outside that group represent approximately 62% of CSC Holdings' total asset value, compared with approximately 28% for the Suddenlink assets remaining in the restricted group.

The first move came in July 2025, when CSC transferred its Brooklyn and Bronx Cablevision assets into newly created unrestricted subsidiaries. According to the complaint, those assets included approximately 1.55 million service locations and 695,000 subscribers and were expected to generate approximately $825 million to $875 million of annual revenue. A newly formed bankruptcy-remote subsidiary then raised $1 billion through an asset- and receivables-backed facility provided by lenders including Angelo Gordon and Goldman Sachs. The financing carried an 8.875% coupon and was issued at 96 cents on the dollar, with the complaint saying the company ultimately received approximately $873 million after fees and expenses. Funding the new facility required the release of guarantees and liens associated with the Brooklyn and Bronx assets, and the lenders contend the transaction did little to address CSC's overall leverage, which increased from approximately 8.0x to 8.1x following the financing.

The more significant transaction came in November 2025 and involved the remainder of the Cablevision assets. CSC first incurred approximately $2 billion of new B-7 term loans from JPMorgan Chase Funding and used approximately $1.95 billion of the proceeds to repay its existing B-6 term loans. According to the plaintiffs, that repayment allowed CSC to release guarantees and liens and designate 11 subsidiaries holding the remaining Cablevision assets as unrestricted subsidiaries. Those subsidiaries held fiber-optic and hybrid fiber-coaxial infrastructure and related assets in Connecticut, New Jersey and the greater New York City area outside Brooklyn and the Bronx.

Once those subsidiaries were outside the restricted group, newly created unrestricted-subsidiary borrowers raised another $2 billion from JPMorgan Chase Funding. The new loans carry a 9% interest rate, mature in November 2028 and are secured by substantially all of the assets of the unrestricted loan parties, including the Cablevision assets that had previously supported the CSC creditor group. The proceeds from that financing were then transferred back and used to repay the B-7 loans that had just been incurred. Put more simply, the lenders allege CSC borrowed $2 billion, used the money to eliminate the B-6 debt and release the related guarantees and collateral, moved the Cablevision subsidiaries outside the original credit group, borrowed another $2 billion against those assets and used that money to repay the first $2 billion loan. The plaintiffs argue that the short-lived B-7 financing was an intermediate step used to facilitate the release of their guarantees and liens and that the transaction required unanimous lender consent.

According to the complaint, the Cablevision assets removed from the original credit group generated more than $2 billion of annual EBITDA, representing approximately two-thirds of Optimum's consolidated 2025 EBITDA. Following the transactions, the lenders say the original restricted group was largely left with the Suddenlink assets while the Cablevision assets supported a separate pool of unrestricted-subsidiary debt.

The company returned to the unrestricted-subsidiary structure in January 2026, when JPMorgan Chase Funding provided another $1.1 billion of term loans just days before call protection on the July financing was scheduled to become effective. Those proceeds were used to refinance the original $1 billion Brooklyn/Bronx facility at par, plus accrued interest and fees, after which the Brooklyn and Bronx assets joined the remaining Cablevision assets as collateral under the unrestricted-subsidiary credit agreement. The complaint says the unrestricted subsidiaries at that point held assets the company itself represented as comprising approximately 62% of its value while carrying approximately $3.1 billion of debt and no near-term maturities. Another $250 million of incremental unrestricted-subsidiary term loans was raised in July 2026 for general corporate purposes.

The lenders also challenge what happened after the Cablevision assets were moved. In June 2026, Optimum announced an internal reorganization intended to enhance the operational and financial independence of the Cablevision unrestricted subsidiaries and insulate them from the potential consequences of a future default under CSC's funded debt. According to the complaint, CSC transferred the equity of the unrestricted subsidiaries holding the Cablevision assets, along with contracts, leases and other related property, beneath newly created entities, creating another layer between those assets and the original CSC creditor group.

The new holding company then issued $300 million of preferred units to 2 institutional investors carrying quarterly dividends of between 13% and 15%. Of particular importance to the restructuring negotiations, the complaint says the preferred investors are entitled to redemption at 2.5x their original investment if CSC creditors exercise remedies that result in a bankruptcy, while lower redemption multiples of 1.25x or 1.5x apply if a consensual resolution with creditors is reached, depending on timing. The lenders argue that the structure makes it more expensive for them to exercise their remedies while creating an incentive to reach a restructuring on terms acceptable to Optimum.

The same preferred structure was also used in transactions involving Optimum insiders. Next Partner, an entity owned and controlled by Drahi, received approximately $200 million of preferred units in exchange for Optimum common stock, while other directors and officers received another approximately $12.4 million. According to the complaint, the Optimum shares exchanged in the transaction were valued at $2.50 per share, approximately 3.8x the company's closing share price when the transaction was completed. The lenders also challenge a separate tender offer through which the unrestricted-subsidiary holding company spent $300 million to acquire 120 million Optimum Class A shares at $2.50 per share, as well as a make-whole obligation that the complaint says could total approximately $600 million if enforcement by CSC creditors results in a bankruptcy.

All of this was taking place while Optimum and its creditors were already discussing the company's balance sheet. According to the complaint, Optimum and an ad hoc group of CSC funded debtholders had been discussing a broader restructuring before the July 2025 transaction, but those negotiations ended without an agreement in April 2025. The lender group attempted to reengage and proposed refinancing the July facility in August 2025, but the company rejected that proposal. The plaintiffs allege the subsequent unrestricted-subsidiary transactions and asset transfers were used to increase Optimum's negotiating leverage and make it more costly for creditors to enforce their rights outside a consensual restructuring.

The complaint also points to CSC's financial condition in support of the lenders' fraudulent transfer claims, citing a reported member's equity deficiency of approximately $5.52 billion as of June 30, 2026, previous disclosures showing liabilities exceeding assets, distressed trading in the company's notes and ratings downgrades by S&P and Moody's. The lenders allege CSC and related entities were insolvent when a number of the challenged transactions occurred.

The relief being sought could have a direct impact on how an eventual Optimum restructuring plays out. The lenders want the court to declare that CSC breached its credit agreement and that a default has occurred and is continuing, including a finding that unanimous lender consent was required for the B-7 amendment used to facilitate the November transaction. They are also asking the court to find the B-7 amendment and resulting unrestricted-subsidiary designation ineffective, which they contend would leave the former CSC guarantors obligated under the original guarantees and their equity subject to the original CSC pledge agreement.

The plaintiffs are also seeking to unwind the unrestricted-subsidiary designation, the B-7 transaction, the November, January and July unrestricted-subsidiary financings, subsequent Cablevision asset transfers, the insider preferred equity exchange and the $300 million tender offer as alleged fraudulent transfers. The complaint includes additional claims for tortious interference, breach of the implied covenant of good faith and fair dealing, aiding and abetting fraudulent transfers, conspiracy and breaches of fiduciary duty, and seeks damages, recovery of transferred assets and attorneys' fees. The plaintiffs also allege CSC Holdings has operated as an alter ego of Cablevision and Optimum and seek recovery from those entities where applicable. 

With approximately $6.2 billion of debt coming due in 2027, the outcome could materially change the negotiating positions of the different creditor groups ahead of a broader restructuring. The lenders' case is essentially that assets representing the majority of CSC's value were moved outside the original restricted group and now support a separate pool of debt, while billions of dollars of legacy CSC debt remains behind. If the lenders succeed in restoring the former guarantees and collateral or unwinding the unrestricted-subsidiary transactions, that could have a meaningful impact on recoveries and where the leverage sits in any restructuring negotiations. If the transactions withstand the challenge, the Cablevision assets would remain structurally separated from much of the legacy CSC debt.