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J. Crew Group announced it is seeking court backing for its effort to restructure, which included moving some of its intellectual property assets into a separate subsidiary.
The US retail group, known for its preppy clothing, said in a statement it sued Wilmington Savings Fund Society, the successor agent under the firm’s term loan agreement, “based on actions taken by an ad hoc group of term loan lenders to disrupt the Company’s evaluation of opportunities to enhance its capital structure.”
J. Crew Group, which is backed by private equity firms TPG Capital and Leonard Green & Partners, reiterated today it has been “proactively exploring” opportunities to restructure its capital as it contends with sliding sales of its clothing.
Case in point was its decision on December 5, to “invest certain intellectual property in the Company’s wholly owned unrestricted subsidiary, J. Crew Domestic Brand, LLC”.
J.Crew says it was within the bounds of its term loan agreement, but is seeking “a declaration from the Court that its actions are in full compliance under the Company’s Term Loan Agreement” and believes “that any attempt to challenge the Company’s actions is invalid and that the litigation will be resolved promptly in its favor.”
Mike Nicholson, president of the group, said:
The legal actions we are taking today are aligned with our ongoing efforts to evaluate and pursue opportunities to strengthen our balance sheet as we position J.Crew for long-term growth.
The company said neither the transactions at issue or the lawsuit filed today affect its ongoing use of its intellectual property or business operations.