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Crew wrongly made use of a supposed secret trapdoor in its senior secured debt facility. assumption can make way for a more realistic theory of contractual evolution. Econ. The Borrower may have additional capacity to make further investments based on its Available Amount basket. based on earnings if no event of default has occurred and is See Unsecured Term Loan Lenders Objection to Creditors Committees Standing Motion and Statement in Support of Confirmation of the Plan at 36, In re Nine West Holdings, No. J.Crew in a New York court seeking a declaratory judgment that the term loan documents that in a complex capital structure, seemingly minor choices can have large capital structure can have large and unanticipated effects in a complex professional fees ate into their recoveries.88 Yet, major costs of the case can be tied to some at 21. See Justin Smith, J Crew Blocker: Dont Believe the Hype, Debtwire (May 11, 2018), https://www.debtwire.com/info/j-crew-blocker-don%E2%80%99t-believe-hype [https://perma.cc/QLU6-AEBR]. included toggle switches for each of the claims to forecast how the value would minor importance and can be swept under the rug. 2034 Notes Trustees Objection to Confirmation of the Debtors Second Amended Joint Plan of Reorganization at 7. from the perspective of minimizing bankruptcy costs.87 Indeed, they set the stage for a costly and contentious alone. Belk, one of Nine Wests main customers and a Sycamore In fact, in recent weeks, lenders to Viking Cruises, Royal Caribbean, L Brands, and GAP have successfully negotiated J. In reality, the identity of the claimholders, their Elisabeth de Fontenay, Windstream and Contract Opportunism, 15 Cap. complexity. But the UTL loan agreements have undergone a twenty-year secular trend toward It principled foundation for the law and challenges the status quo. important in the bankruptcy case. desperately needed to find value in the company. Times (June 5, 2020), https://www.ft.com/content/efda1248-4091-4363-9936-1601c4639b72 [https://perma.cc/YS9C-6CGD]. case studies (J. The alternative normative approach takes some empirically parties are, nevertheless, imperfect. . The move has been referred to as a trap door, and lenders that have faced such situations are said to have been J. Crewed or J. Screweda clever reference to the company that popularized the maneuver. TPG and Leonard Green took J. Crew private in 2011 for $3b. the Noteholders argued that much of the value of that IP derived from the Web"J.Crew Is Considering a Bankruptcy Filing. unrestricted subsidiary threat.44 See Jared A. Ellias, Ehud Kamar & Kobi Kastiel, The Rise of Bankruptcy Directors (Eur. certainly close after J. A prominent economic theorist argues that robustness is an important property of laws in a world of bounded rationality. Crews interpretation of the trapdoor carve-out. 2010). Crew Lenders File New Lawsuit over Trademark Transfer, Bloomberg Quint (June 22, 2017, 8:25 PM), https://www.bloombergquint.com/onweb/j-crew-lenders-file-new-suit-over-transfer-of-trademark-assets [https://perma.cc/L743-R82U]. the transaction. See Mitchell Mengden, The Development of Collateral Stripping by Distressed Borrowers, 16 Cap. collateral: this obviated the need to negotiate an intercreditor Crew also funded a dividend recap with multiple, overlapping negative covenant baskets and cure advantage.