Exploring the controversial provision in the J. Crew credit agreement that allowed the company to bypass its creditors and raise debt from other sources through transferring assets to unrestricted subsidiaries.
The Covenants by Reorg team discusses how the J Crew Trapdoor could be a red herring and investors need to be alert even if it is not there, how the unrestricted subsidiaries maneuver(made infamous by J Crew) could be used for creative restructurings, recent examples of asset leakage to unrestricted subsidiaries and how investors can demand protection in documents.
If you are not a Reorg subscriber, request access here: https://go.reorg-research.com/Podcast-Trial.