This chapter explores the J. Crew transaction where they removed their intellectual property from existing lenders' collateral package and used it for new debt. It also discusses the market response and the introduction of a loophole in credit agreements that could allow borrowers to do a similar maneuver.
The infamous J.Crew maneuver was a bombshell, setting a blueprint for contentious liability management deals and sparking a wave of efforts to block such maneuvers. Now, some direct lenders are worried they've found a way around those blockers.
As we wrote earlier this week, securitization baskets in some credit agreements could be loose enough to allow borrowers to securitize assets like intellectual property.
How realistic is this idea, and what can people do about it? Will Caiger-Smith quizzes covenant expert James Wallick to get the answers.