In Finance, ‘J. Crew’ Is a Verb. It Means to Stick It to a Lender

J. Crew Group Inc. and its private-equity owners pulled off a neat move in 2016. The deeply indebted preppy retailer needed to raise money but didn’t have any fresh assets to pledge as collateral for a loan. Whatever of value it owned was already pledged to existing lenders.

So J. Crew opened a trap door. It put its brand name and some other intellectual property into a new entity in the Cayman Islands that was beyond the legal reach of its existing lenders. Then it used that new entity to borrow $300 million from Blackstone Group LP. The existing lenders, ...