J. Crew As a Verb
What is getting J.Crewed? Why is it a verb? And what do underfed preppies have to do with finance?
Evidently beggars can be choosers. Let us say that you run a distressed company that is badly in need of cash… normally you can get some by putting up collateral to back the loan. And when you blow up the lender gets that stuff. Which is pretty standard.
Then you transfer the assets that you used to back the loan – if you are J.Crew you do this with some intellectual property – into a subsidiary that is free from the grasping claws your creditors who mistakenly thought that they’d get their money back.
Now you can use that same collateral to raise even more money. It’s almost like a second mortgage with the advantage that the first lender is the one that drops in the pecking order if the debt gets distressed enough to go toe up. The tactic was pioneered by J.Crew where there is more than just air in those enormous pants. Since then the tactic has been used by Revlon, casino and hotel chain Golden Nugget and tourism outfit Travelport.
Well, who knew they had it in them?