"The term refers to a 2017 incident in which the preppy clothing chain, under pressure from its creditors, utilized a "trap door" maneuver in which $250 million of its trademarks, including the name "J.Crew," were moved to an entity in the Cayman Islands and then leased back to the company. That placed the assets out of reach of J.Crew's creditors in the event of a bankruptcy. The new entity was able to raise a further $300 million in new debt—much to the dismay of the older creditors who wanted the opposite to happen."
"The J.Crew blocker in the JPMorgan-Coherent deal was interesting because in Q3 2025, 45% of private credit deals contained a J.Crew blocker, up from 26% the year before, and up from just 15% at the start of 2023, according to data from Noetica, a firm that advises on and analyzes private credit deals. Noetica's database, which uses AI to sift contract language, covers more than $1 trillion in transactions and the company advises "nearly all" of the top 20 corporate law firms in the U.S."
"That's not all. Lenders to corporate America—often big banks generating broadly syndicated loans that are sold on public markets—are getting stricter with their borrowers on a range of legal issues inside private credit deals, Noetica's data indicates. While default rates and covenant breaches are not currently at unusual levels, the fact that banks are behaving as if they need to prepare for future negative consequences is significant, according to Noetica CEO Dan Wertman."
JPMorgan arranged refinancing for Coherent Corp with a $1.25 billion private credit loan and a $700 million revolving facility that included a J.Crew blocker. The J.Crew blocker references a 2017 maneuver where trademarks were shifted offshore and leased back, putting those assets beyond creditors and enabling new debt issuance by the new entity. Noetica data shows the use of J.Crew blockers rose to 45% of private credit deals in Q3 2025, up from 15% in early 2023. Banks and lenders are tightening legal protections and covenants in private credit despite current default rates remaining unremarkable.
Read at Fortune
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