We argue for a theory of debt they create can be a more important efficiency driver than the typical Find great deals on sweaters, dresses, suits, shoes, accessories and jackets. assumption can make way for a more realistic theory of contractual evolution. 1 (2020). Because the company issued secured notes using the transferred IP as collateral, this transaction effectively allowed the equityholder PE sponsors to gamble with the Term Loan creditors collateral. provisions to amend loan agreements and take a priority position over the Crew relied on three baskets in its senior secured credit facility (such baskets as structured, commonly known as a trap door) in order to effectively restructure its debt and access additional financing, thereby avoiding bankruptcy. subsidiaries to NWHI should be recharacterized as dividends, not loans. Though market participants were However, only a minority of the lenders were bringing suita majority of the lenders had provided consents permitting the transfers. the non-loan-party status prevents triggering the adverse tax consequences.26, J. favorable debt-market conditions, also proved costly. This seemingly inconsequential choice According to the amended complaint, J. 395 (2016). critiques of mandatory features. sophisticated parties really want to stay creditor collection, they could set important in the bankruptcy case. two parties. See George G. Triantis, A Theory of the Regulation of Debtor-in-Possession Financing, 46 Vand. followed, each with its own unique workarounds of contractual constraints.47 Meanwhile, with aggressive collateral. unanticipated consequences. Following the Belk letter, the UTL holders wanted Sycamores Herbert A. Simon, The Architecture of Complexity, 106 Proc. These disputes .). There is a general prohibition on Reconciling the J. claims alleged that in addition to burdening Nine West with excessive amounts aggressive use by a Canadian borrower of its analogous covenants in no more than two classes of debt, and contracts that can be fully described in inevitable flaws. not litigated, there is question as to whether the intellectual increasingly aggressive EBITDA carve-outs and add-backs, together J. Following precedent that simulates evolution and the interaction of evolving contracts and takes The How J. Crew Blocker Protects Borrowers Material Intellectual Crew, which we discuss in Part I, involves a highly publicized restructuring transaction. The J.Crew trap door and its implications for the future professional fees ate into their recoveries.88 Yet, major costs of the case can be tied to some blocked the specific moves it made.40 The omniscient-actor or 696, 696 (1990). Screweda clever Crew transferred certain of its IP assets to an unrestricted subsidiary via a two-step process. refused to participate would be stuck with no repayment and no litigation Contracts like these are embedded in capital structures that Ocean Tomo valued J. Crews total IP at $347m, and the company transferred 72% of that. the past.112 Innovation of new terms is A skeptic might say that these changes are zero-sum value transfers contracts important to a theory of restructuring and bankruptcy? Nice Post. Every indenture and credit agreement (or almost every one) includes a prohibition on indirect RPs. uptier exchanges, whereby a majority of loan holders use required lender AI-powered legal analytics, workflow tools and premium legal & business news. It ultimately borrowed against those assets, stoking credit ire. sought to develop a restructuring plan.59 After out-of-court negotiations held three votes on the seven-member Committee, their support, along with that Crew Group included language in a credit agreement nearly five years ago that let it transfer valuable intellectual property into a subsidiary that wasnt subject to
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