Altice France's Cross-Border Restructuring: Navigating Jurisdictional Complexity to Maximize Creditor Recoveries

The telecommunications giant Altice France has entered a critical phase of its restructuring journey, filing for Chapter 15 bankruptcy protection in New York while pursuing parallel proceedings in France. This dual-track approach underscores the intricate interplay between cross-border insolvency frameworks and the competing interests of global creditors. For bondholders, the stakes are high: the interplay of U.S. and French bankruptcy laws will shape recovery prospects, while strategic choices made now could determine whether they salvage value or face prolonged uncertainty.

The Legal Tightrope: Chapter 15 vs. French Restructuring Options

Altice's June 17 Chapter 15 filing in New York seeks recognition of its foreign proceeding—a likely French conciliation or sauvegarde—under the U.S. Bankruptcy Code. This move halts U.S. creditor actions and enables coordination with French courts. However, the ultimate restructuring framework remains fluid:

• French Pathways:
  Under France's modernized insolvency laws, Altice could pursue conciliation (a five-month consensual process) or sauvegarde (an in-court restructuring allowing cram-downs). The latter, if triggered, could impose a plan over dissenting creditors, stripping equity stakes under the absolute priority rule. For bondholders, this poses risks: a sauvegarde might dilute recoveries if creditors accept terms unfavorable to junior claimants.

• U.S. Chapter 11 Option:
  While less likely, a direct Chapter 11 filing in New York could offer advantages, such as pre-arranged plans or leveraging New York-governed debt terms. However, it would require Altice to demonstrate sufficient U.S. nexus—likely met through bank accounts or litigation exposure—and could complicate coordination with French stakeholders.

The choice hinges on creditor dynamics. A would reveal market sentiment, but the legal landscape remains contested. U.S. courts will scrutinize whether France is Altice's “center of main interests,” a threshold easily met given its French incorporation and operations.

Creditor Dynamics: Group Formation and Strategic Leverage

Creditor groups have already formed, with secured bondholders engaging advisors like Gibson Dunn and Houlihan Lokey—a sign of contentious negotiations. Key focal points include:

1. The Unrestricted Subsidiary Designation:
   Altice's decision to classify Altice Media (sold for €1.55 billion) as an unrestricted subsidiary has sparked legal disputes. Creditors argue this shields proceeds from debtors' estates, violating financing agreements. Bondholders must push for clawback provisions or guarantees that proceeds fund debt repayment.

2. Pre-Arranged Agreements:
   A restructuring support agreement (RSA) among major creditors could fast-track a Chapter 11 or sauvegarde plan. If secured lenders holding ~€15 billion in claims align, they could force Altice into a consensual deal. Failure to secure 90% creditor support (a threshold for out-of-court success) may trigger in-court actions, with bondholders facing slower recoveries.

Risks and Opportunities for Bondholders

• Key Risks:
• Equity Overreach: French sauvegarde or U.S. Chapter 11 cram-downs could subordinate bondholders to equity claims, especially if Altice retains founder Patrick Drahi's stake.
• Jurisdictional Conflicts: Disparities in creditor treatment under U.S. and French laws may spark litigation. For example, U.S. courts might reject French cram-down terms seen as unfair to junior creditors.

• Asset Shielding: The Altice Media sale's proceeds, if not fully directed toward debt repayment, could leave unsecured creditors undercompensated.

• Strategic Opportunities:

• Pre-Packaged Plans: Bondholders who negotiate an RSA before formal proceedings can lock in favorable terms, avoiding costly litigation.
• Equity Participation: Plans offering creditors 31% equity in Altice France SA or 14% in its holding company could provide upside if the company rebounds. A would help assess this.
• Collateral Enhancements: New debt terms, including a 2.0x senior leverage cap and anti-avoidance clauses, reduce refinancing risks and stabilize cash flows.

Investment Strategy: Navigating Cross-Border Complexity

Creditor groups must adopt a multi-pronged approach:

1. Demand Transparency: Insist on detailed disclosures about Altice's capital structure, including the use of Altice Media proceeds and intercompany loans.
2. Prioritize Pre-Arranged Deals: Push for an RSA to avoid the inefficiencies of in-court litigation.
3. Leverage Jurisdictional Flexibility: If U.S. courts recognize French proceedings under Chapter 15, creditors can advocate for terms that align with both systems' priorities—e.g., ensuring equity stakes are tradable and enforceable globally.
4. Monitor Judicial Precedents: Cases like BreitBurn Energy Partners (2019) highlight how U.S. courts treat cross-border equity stakes; bondholders should seek similar protections.

Conclusion: A Delicate Balance Between Risk and Reward

Altice France's restructuring is a test case for cross-border insolvency frameworks. For bondholders, the path to recovery depends on balancing legal leverage with strategic pragmatism. While the unrestricted subsidiary dispute and equity retention risks loom large, proactive creditor coordination—backed by robust RSAs and judicial engagement—can mitigate losses. The coming months will reveal whether Altice's dual-track approach yields a sustainable plan or deepens creditor divisions. For investors, the lesson is clear: in cross-border restructurings, jurisdictional nuance and creditor solidarity are the ultimate arbiters of value preservation.