J Crew Credit Agreement

In response, lenders began to include multiple blockers in their credit facilities. In the case of credit facilities, two types of restrictions are widespread: (a) a limitation on the transfer of physical intellectual property and (b) a limitation on the holdings of non-credited subsidiaries in full-fledged subsidiaries. The first restriction focuses exclusively on intellectual property and consists of three main variants that (i) restrict the expulsion of subsidiaries holding essential intellectual property as unlimited subsidiaries (which does not prevent future transfers intellectual property to such unlimited subsidiaries), (ii) substantial intellectual property transfers by the parties to the loan and (iii) transfers from full subsidiaries (which does not prevent the transfer of other material assets). The second restriction focuses mainly on the “door trap” and prevents non-credit-related subsidiaries from ininvesting in full-fledged subsidiaries with the products of the loan companies. As mentioned above, these limitations resolve some of the specific weaknesses that J.Crew has been able to exploit, but they cannot be protected from the transfer of other material resources. The impact of this $250 million transfer was that the lenders had lost their promise of marks on J.Crew`s core value and that each insured party to which these marks were promised had a huge influence on the group of lenders as part of the credit facility. In addition to the breach, borrowers would now have to pay a fee for the use of the trademarks previously owned by the borrowers. Finally, in the event of bankruptcy, the license for the trademarks could be refused by the licensee, which would give the licensee additional influence over J.Crew and its other creditors. The obligations of the RCF borrowers and the note issuer were secured by various entities in the group and secured by assets that included McLaren`s Heritage Cars collection and the group`s Woking HQ (“Properties”) (Security package).

The guarantee was held by U.S. Bank Trustees Limited as a security agent for creditors (security agent) and was the subject of an intercreditor agreement of July 20, 2017 (“Intercreditor Agreement”).

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