Key Takeaways
- Kirkland & Ellis has quit as legal counsel to Altice USA due to pressure from top US private capital firms
- The investors were angered by a novel antitrust lawsuit filed by Altice USA, which alleged that they had formed an illegal cartel in a debt refinancing negotiation
- The lawsuit, filed in November, alleged that creditors including Apollo Global Management, Ares Management, and BlackRock, had violated US antitrust law by signing a "co-operation agreement"
- Kirkland & Ellis had been accused of being behind the lawsuit, despite denying any involvement
- The firm’s withdrawal from the assignment is seen as a result of the significant amount of capital markets and M&A fees it generates from private capital firms
Introduction to the Situation
Kirkland & Ellis, a prominent law firm, has withdrawn from its role as legal counsel to Altice USA, a telecoms group, following pressure from top US private capital firms. The decision comes after Altice USA filed a novel antitrust lawsuit in November, alleging that several creditors, including Apollo Global Management, Ares Management, and BlackRock, had formed an illegal cartel in a debt refinancing negotiation. The lawsuit, which was filed by Kellogg Hansen, a Washington DC boutique law firm, claimed that the creditors had violated US antitrust law by signing a "co-operation agreement" that prevented any signatories from agreeing to a bond exchange with Altice USA without the approval of other creditors.
The Antitrust Lawsuit
The antitrust lawsuit filed by Altice USA, now known as Optimum Communications, alleged that the creditors had formed a "classic illegal cartel" by signing the co-operation agreement. The pact, which included more than 90% of Altice’s creditors, was seen as a way to prevent any individual creditor from agreeing to a bond exchange with the company without the approval of the other creditors. Altice USA claimed that this agreement was a violation of US federal and New York state law, and a court hearing is scheduled to be held this month in New York to determine the next steps in the case. The lawsuit was seen as a significant move by Altice USA, and it sparked a strong reaction from the creditors involved.
Kirkland & Ellis’s Involvement
Kirkland & Ellis, a Chicago-based law firm, was accused of being behind the antitrust lawsuit, despite denying any involvement. The firm had publicly mused about challenging co-operation agreements in the past, and lawyers from the firm had been involved in similar cases. However, Kirkland & Ellis stated that it did not sue clients and did not do so in this case. The firm’s top executives had held meetings with private capital firms to soothe feelings over the lawsuit, but ultimately, the pressure from the investors proved too great, and Kirkland & Ellis was forced to withdraw from the assignment.
The Aftermath
The withdrawal of Kirkland & Ellis from the Altice USA assignment is seen as a significant development in the case. Optimum, backed by French billionaire Patrick Drahi, had already started interviewing replacement law firms to lead the ongoing debt renegotiations. The move is also seen as a reflection of the significant amount of capital markets and M&A fees that Kirkland & Ellis generates from private capital firms. One person close to Altice USA noted that the firm’s dominant position in both formal bankruptcy assignments and "liability management" deals forced it to accede to the demands of the private capital firms to resign from the Optimum assignment. The incident highlights the complex relationships between law firms, private capital firms, and their clients, and the potential conflicts of interest that can arise in high-stakes cases like this one.
Conclusion
The withdrawal of Kirkland & Ellis from the Altice USA assignment is a significant development in the ongoing debt renegotiations and antitrust lawsuit. The case highlights the complex relationships between law firms, private capital firms, and their clients, and the potential conflicts of interest that can arise in high-stakes cases. The incident also reflects the significant influence that private capital firms can wield over law firms, particularly when it comes to high-profile cases like this one. As the case continues to unfold, it will be interesting to see how the parties involved navigate the complex web of relationships and interests at play.
