Researcher ORCID Identifier
https://orcid.org/0000-0002-5872-7048
Graduation Year
2021
Date of Submission
11-2020
Document Type
Open Access Senior Thesis
Degree Name
Bachelor of Arts
Department
Economics
Reader 1
George Batta
Terms of Use & License Information
Rights Information
© 2020 Michael M Sill
Abstract
A “J. Crew Maneuver” is a type of collateral-stripping event that transfers the value of a nearly insolvent company from the lender to the borrower. This concept matters to lenders because it exposes them to significant downside risk through the loss of hundreds of millions of pledged collateral. While credit analysts and debt lawyers have commented on the importance of preserving creditor value ex ante through lender-protective clauses embedded within debt documents, this paper breaks ground on empirically studying the determinants of these protective clauses known as “J. Crew Blockers”. I hypothesize that private equity backing, a contractionary credit environment, contractual “stickiness” and the presence of an innovative law firm all influence the likelihood of observing J. Crew Blockers in debt documents. Using a multiple regression analysis as my primary regression, I analyze 10,370 debt contracts to find that contractual stickiness is the greatest contributing factor to likelihood of J. Crew Blocker inclusion, with other factors contributing residually.
Recommended Citation
Sill, Michael, "Don’t Get Screwed: What Factors Determine the Inclusion of J. Crew Blockers?" (2021). CMC Senior Theses. 2536.
https://scholarship.claremont.edu/cmc_theses/2536
Included in
Business Administration, Management, and Operations Commons, Business Law, Public Responsibility, and Ethics Commons, Corporate Finance Commons, Finance and Financial Management Commons
