In private credit, banks are ‘quietly preparing for some distress on the horizon’ by requiring ever

In September of this year, JPMorgan helped Coherent Corp—a maker of lasers and optical equipment—refinance some of its debt with a new $1.25 billion private credit loan and a $700 million “revolving” credit facility. The deal contained a newly trendy clause in its legal paperwork: a “J.Crew blocker.”

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 wa