32% of high-yield bonds now include J. Crew blockers, up from 20% in 2024, per Moody’s Ratings, signaling heightened investor demand for asset protection. These clauses prevent borrowers from using collateral—like intellectual property or FCC licenses—to secure new debt, a tactic critics call “J. Crewing” after the 2016 retailer’s controversial restructuring. The trend reflects broader market shifts toward curbing aggressive liability management (LME) strategies that often subordinate minority lenders.

Named after high-profile cases, J. Crew blockers remain dominant, but newer measures like the Chewy blocker—which stops automatic subsidiary guarantee releases—are gaining traction. Others, such as the Serta blocker (derived from lenders vaulting to the front of Xerox’s payment line) and Pluralsight blockers, target specific transaction risks. Moody’s notes borrowers are layering multiple safeguards as rates stay elevated, complicating distressed scenarios.

The FCC license protection example highlights evolving collateral concerns beyond traditional assets. While LMEs remain a critical tool for avoiding bankruptcy, investors argue expanded blockers create fairer outcomes by limiting borrower flexibility. This arms race underscores growing tension between creditors seeking stability and borrowers needing liquidity.

With double-dip blockers appearing in deals like Xerox’s, the market’s lexicon of defenses expands. Moody’s warns this could prolong negotiations but may reduce litigation risks. For now, the battle over asset control in junk bonds shows no signs of abating, reshaping how distressed debt is structured.