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

The protective mechanisms in the credit market are collapsing simultaneously across two continents. Last year, JPMorgan Chase CEO Jamie Dimon warned that the problems in the credit market would not be isolated incidents—“seeing a 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 number of high-profile European borrowers such as Altice, Ardagh, and Victoria initiate “liability management exercises” (LME), the vulnerability of the European credit market can no longer be concealed.

More notably, Altice’s U.S. operations, Altice USA, recently sued major creditors including Apollo, Ares, and BlackRock in the Federal Court of New York, accusing their cooperation agreement of constituting an “illegal cartel.” If successful, this lawsuit could fundamentally weaken lenders’ ability to coordinate self-protection and may serve as a legal blueprint 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 covenants 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 launched liability management exercises between 2023 and 2025.

At its core, an LME involves borrowers restructuring 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 strength to secure increasingly lenient covenant protections, while lenders, under competitive pressure, repeatedly concede.

Since 2023, lenders have begun to fight back against this offensive, mainly using two tools: first, adding “blocker provisions” in contracts to explicitly prohibit certain types of LMEs; 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 has also triggered strong countermeasures from borrowers.

Altice Lawsuit: A Legal Battle That Could Rewrite the Rules

The latest move by Patrick Drahi, billionaire owner of Altice, has escalated this game to a new level. According to The Financial Times, Drahi persuaded JPMorgan Chase to provide refinancing loans to Altice USA (its Optimum Communications business), thereby lifting the original strict lender protections and releasing some valuable assets—an essential step in managing the group’s $26 billion debt load. 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 Federal Court of New York against major creditors including Apollo, Ares, and BlackRock, accusing their cooperation agreement 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 the cooperation agreement is anti-competitive, the core tool of lender coordination and self-protection will be fundamentally undermined, greatly reducing borrowers’ resistance to LMEs. Even 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 terms—hold the advantage.

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