j. crew mickey drexler

J. Crew’s fight to keep its intellectual property away from cash-hunting lenders is heating up.

The retailer on Thursday rejected arguments by Wilmington Savings Fund Society, the lender agent for a $1.5 billion term loan, that J. Crew’s decision to put 72 percent of the retailer’s U.S. trademarks, valued at $250 million, into a new subsidiary out of reach of the lenders cannot be approved.

Wilmington also claims that the intellectual property at issue actually belongs to the lenders as a term of a 2011 loan agreement and that the “insolvent clothing retailer” moved the assets in order to “expropriate” their value for the benefit of the company owners and its indirect parent, Chinos Intermediate Holdings A Inc., as they attempt to restructure another $500 million in PIK debt.

In a standard legal reply to the claims, J. Crew denied Wilmington’s “characterizations” of the term loan or that “any defaults or events of default have occurred or are occurring.”

As for Wilmington’s argument that J. Crew has been “running roughshod over the loan documents” and its demand that the court deem the IP move a fraudulent transfer free to be reversed entirely, the retailer denied them outright.

In an earlier letter to the court, J. Crew also argued that Wilmington’s “extensive discovery demands” in the case so far — demands the agent says have been ignored — are nothing more than an attempt to drudge up some factual issue worthy of trial where there is none.

“There are no issues of material fact that require discovery in this matter, since the parties’ claims for declaratory relief involve the application of unambiguous contractual terms to undisputed facts,” the retailer said.

Representatives of J. Crew and Wilmington could not be reached for comment.

The retailer launched the suit in February, claiming Wilmington and the term loan lenders were exerting undue pressure with claims that moving the IP assets violated loan agreements.

Wilmington’s actions however are “nothing more than a thinly veiled ploy to hold J. Crew hostage and improperly extract financial value to benefit the interests of the ad hoc group at the expense of J. Crew and its other stakeholders,” the company said in its complaint.

Crew has had a tumultuous few months, with lenders growing anxious about restructuring plans, still slipping sales and the planned exit of Jenna Lyons, the company’s longtime president and creative director.

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