J. Crew blockers are making a comeback

At, we have access to vast amounts of data & insights about capital markets transactions—follow along as we release market snapshots, beginning with a topical one:

In 2016, J.Crew, facing financial trouble, utilized unrestricted subsidiary capacity to move material intellectual property (IP) (e.g., trademarks) out of the credit group, thereby releasing creditors’ security interest in such IP. This maneuver, an early form of liability management transaction, allowed it to raise new financing secured by those IP assets while effectively subordinating existing creditors’ claims on such assets.

Today, “J. Crew blockers” have become a heavily focused-on lender protection in a world with greater attention on liability management transactions.

At a basic level, J. Crew blockers aim to protect lenders from value leakage through the transfer of material IP to entities beyond the reach of lenders.

In the third quarter of 2024, 26% of publicly filed high yield credit agreements included limitations on IP transfers, compared to 21% in the same period in 2023.

Crucially, 11% of agreements in Q3 2024 provided full protection by prohibiting both the transfer of material IP and designation of a subsidiary as an unrestricted subsidiary while holding material IP; 15% included weaker protections.

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