Creditors to Optimum Communications filed a New York state court lawsuit against the cable operator, its founder Patrick Drahi and certain company managers, alleging they orchestrated fraudulent transfers to move billions of dollars of assets beyond their reach.

The creditors alleged that Drahi and his associates, including former Optimum Chief Executive Dexter Goei, placed their own equity interests ahead of creditors by shifting the valuable fiber and cable assets even though the company was insolvent under a $21 billion debt load. They also alleged that management then created a "sham entity" to issue lucrative preferred stock that further damaged the creditors' financial position.

The lawsuit is the latest volley in a battle between Optimum and its creditors. Last year, Optimum sued the creditors, accusing them of violating antitrust laws by illegally coordinating to fix debt prices and blocking it from doing the debt financing transactions it wanted to do. The group has been disputing those allegations in court filings.

In June, Optimum said it was forming a new subsidiary, Unsub Topco, housing the assets of Optimum East Cable and a stake in the Lightpath Commercial fiber business. Some outside investors bought $300 million in preferred equity, while Drahi swapped $200 million of common shares for an equivalent amount of preferred shares. Optimum also moved certain employees and business contracts to the subsidiary.

The creditors, who have signed a cooperation agreement to act as a united front, alleged these moves were part of a series of "value siphoning transactions" designed to benefit management at the creditors' expense. "There is no legitimate business reason for these transactions, nor does the company even attempt to offer one," their lawsuit says.

"Optimum strongly disagrees with the co-op group's allegations and believes their claims are without merit," a company representative said Monday. "The actions the company has taken to protect and maximize stakeholder value were conducted in full compliance with its existing debt agreements and applicable law, and the company intends to address these claims through the appropriate legal channels."

Drahi's European telecom business, Altice International, is locked in similar fights with its creditors. In July, holders of roughly $9 billion of Altice International's bonds delivered a notice of default, alleging the company breached debt agreements through complex intercompany loans and asset transfers. Altice has disputed the default notice, arguing those creditors lack standing to issue a default.