LME protection review across the whole book: every weak blocker found, with its clause shown
Every weak blocker found across the book, with its clause shown.
See one case, screen by screen ↓A review of each credit agreement in a book for the clauses that block liability management exercises — drop-downs that move assets to an unrestricted or non-guarantor subsidiary, and uptiers that put new money ahead of the existing loans. LME Protection Review grades the J.Crew, Pluralsight, Chewy, Serta, open-market purchase, waterfall, Incora and At Home protections for every loan and quotes the clause behind each grade.
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When defaults rise, sponsors look for room in the documents: a drop-down that moves valuable assets to a subsidiary the lenders cannot reach, or an uptier that puts new money ahead of the existing loans with only a majority's consent. The defences are a handful of named clauses — the J.Crew, Pluralsight, Chewy, Serta, Incora and At Home blockers, the open-market purchase language and the waterfall — and each one can be drafted strongly, narrowed until it does little, or left out.
Knowing which of your loans are open means rereading every credit agreement and every amendment, in order, following every defined term. A J.Crew blocker that covers only “Material Intellectual Property” does nothing for a services company whose value is its contracts; a Serta blocker that protects liens but not payment leaves the uptier open; an amendment signed two years ago may have lifted a cap nobody remembers. And the next question starts the reading again.
Estimated split, in working days of 8 hours, for one question across a 64-loan book with 129 amendments — about 41 days by hand at 4–6 hours per agreement, against a few minutes of reading and a day and a half of people's time with the solution.
Six specialist agents read every agreement as amended and quote the clause behind each finding; the portfolio manager decides what to raise.
Corvane Health Partners has asked its lenders for Amendment No. 4 — waive the Q3 leverage test and two more quarters of PIK, consent by Friday 23 October. Its sponsor, Tamarisk Equity Partners, moved another company's IP to an unrestricted subsidiary last month. Here is how Marrowstone Credit Partners' portfolio manager works it, screen by screen, in the working solution.
Leah opens the Clause finder over Direct Lending Fund III and two co-invest vehicles: 64 loans, 216 documents, 31,480 pages, read as amended by signed documents only and graded against checklist v7. Under the question box sit six saved questions with their counts and last run, and a newly signed document waiting to be loaded.
“I need the answer for the whole book by Thursday, not one agreement by next month.”
The saved answer reads: 7 of 64 loans have no J.Crew blocker, $455.0M held, so a borrower can move its IP or any other asset to an unrestricted subsidiary within the investment baskets. Leah picks Juniper Ridge Behavioral Health and the agreement opens at §7.02(m), p. 129. On the amendment walk she clicks Amd. 2: the old $25.0M cap is struck through and “unlimited Investments in Unrestricted Subsidiaries” takes its place.
Margin note: “Amendment No. 2 · widened the room.”
She asks the wider question in plain words. The run log shows each agent as it works: the agreement stacker reads 216 documents as amended, the definition tracer follows 1,412 defined terms, the blocker grader grades the drop-down and uptier blockers, the basket calculator measures what could move today.
“Corvane read as amended by No. 3 · its request for No. 4 is not signed, so it is not applied.”
11 of 64 loans would let the borrower do both — $733.4M, 18.2% of the $4.02B book, with 22 clauses quoted. Corvane comes first: $142.0M held, consent due 23 October, a J.Crew blocker that covers IP only, a Serta blocker that protects liens but not payment, and $96.3M that could move to an unrestricted subsidiary today. Four of the 11 are Tamarisk loans.
Corvane's §7.06(c) opens beside the table: “Narrowed · IP only.”
The protection map grades all 64 loans on eight protections. J.Crew: 44 strong, 13 weak, 7 missing. Serta: 32 strong, 24 weak, 8 missing. Incora: 11 strong, 42 missing. Filters cut it to the 11 loans open to both moves, the 49 with a must-have weak or missing, or the 7 Tamarisk loans — and it exports for the committee pack.
Corvane's loan page shows 5 of 8 protections weak or missing and leverage of 6.18x against a 6.50x covenant, 6.92x projected for Q3. The basket calculator adds the room at Q2 2026 EBITDA of $68.0M: $45.0M under §7.02(n), $35.0M under §7.02(w) and a $16.3M Available Amount under §7.02(z) — $96.3M, measured at book value under §1.10, so assets worth more could fit.
The calculator never uses projected or pro forma EBITDA the agreement does not allow.
The J.Crew blocker at §7.06(c), p. 142, is graded Weak: it covers only “Material Intellectual Property”, while Corvane's value is in its management services agreements and surgery-centre joint-venture interests; there is no designation prong and exclusive licences are not covered. Beside it, the fund's checklist and the model clause for the ask.
Strong when it “covers all Material Assets (not only IP), both transfer and designation, by any route, and is a sacred right.”
A blocker is cheapest to fix when the borrower needs the lenders. The gaps list holds 11 loans with a consent event, ordered by the date consent is needed — Corvane first, 11 days out, with J.Crew, Pluralsight, Serta, open market and Incora weak or missing.
Leah drafts Corvane's asks from the fund's model clauses: widen J.Crew to all Material Assets with the designation prong, extend it to non-guarantor subsidiaries, take Serta to payment priority and “effect of” language, define open market purchase, add an Incora blocker and cut the §7.02(n) basket to $15.0M. They go to Simone Achterberg, Deputy General Counsel, who approves the drafting.
“Nothing is sent to the agent or the sponsor until counsel approves.”
Hearthline Restaurant Group's Amendment No. 2, signed 12 October, deletes §6.17, its J.Crew blocker, with the Required Lenders' consent. Leah loads it: the agents stack it, regrade the loan and rerun the saved questions — 2 change. “Move IP to an unrestricted subsidiary” goes from 7 loans to 8, $492.0M held, with Hearthline on top marked new today and its walk open on the deletion.
The watcher never marks a gap closed until the amendment is signed and effective.
The same consent request, seen by the five people who carry it — what their week looked like, and what it looks like now.
Six specialist agents read every agreement as amended and quote the clause behind each finding; the portfolio manager decides what to raise.
Applies every amendment, waiver and joinder in the order it took effect, to give each agreement as it reads today.
Follows each defined term — “Material Intellectual Property”, “Unrestricted Subsidiary”, “Required Lenders” — to its definition and every place it is used.
Grades each of the eight protections strong, weak or missing against the fund's checklist and says exactly why.
Measures how much value could move to unrestricted or non-guarantor subsidiaries from the baskets and the latest compliance certificate.
Writes the answer in plain words with the answer table, a numbered source on every finding.
Reruns the saved questions whenever a document arrives and reports what changed to the portfolio manager and counsel.
Decides what to raise; counsel approves the drafting. The agents propose; a named person decides.
The portfolio manager, counsel and the workout team can ask in plain words — or say what to add to the asks. Every answer is numbered to its clause.
Which loans could move assets away from us and also prime us?
11 of 64 loans, $733.4M held, are weak or missing on both the J.Crew and the Serta blocker. Corvane comes first: its waiver request needs your consent by 23 Oct.
What is wrong with Corvane's J.Crew blocker?
§7.06(c) stops only “Material Intellectual Property” going to an unrestricted subsidiary. Corvane's value is in its management services agreements and surgery-centre joint-venture interests, which are not IP, so they can still move. There is no designation prong, and exclusive licences are not covered — the route Tamarisk used at Brenmoor.
How much could Corvane move out of our reach today?
$96.3M, from three baskets at Q2 2026 EBITDA of $68.0M: §7.02(n) unrestricted subsidiaries, $45.0M; §7.02(w) general, $35.0M; §7.02(z) Available Amount, $16.3M. Investments count at book value (§1.10), so assets worth more than $96.3M could fit.
Add Corvane's fixes to the Amendment No. 4 terms
Added 6 asks from the model clauses: J.Crew to all Material Assets plus the designation prong; Pluralsight to non-guarantor subsidiaries; Serta to payment priority and “effect of”; define “open market purchase”; debt to swing a vote does not vote; §7.02(n) cut to $15.0M. They go to Simone Achterberg for the drafting before anything reaches Pellbrook Capital.
13 screens from the working solution, on its sample data. Pick one to see it large.
What counts as a strong blocker, which documents count and which EBITDA the baskets use are settings that counsel and the portfolio team own.
| Setting | Default | Choose from |
|---|---|---|
| Holdings the answers cover | Fund III · Co-invest I and II | Fund III only · Fund II, Fund III and co-invest |
| Read agreements as amended by | Signed and effective documents only | Signed documents, including pending conditions |
| EBITDA for the baskets | Latest compliance certificate | Latest compliance certificate, without add-backs · Underwriting case |
| Protection checklist | Version 7, approved by counsel | Eight protections, each with what counts as strong |
| Must-have protections | J.Crew, Chewy, Serta, waterfall and pro rata sharing | Any protection on the checklist, on or off |
| Rerun saved questions on every new document | On | On · Off |
| Consent request alerts | On — portfolio manager and counsel | On · Off |
| Sponsor watch | On — flag our loans when a sponsor does a drop-down or uptier elsewhere | On · Off |
Every figure is labelled: a target the solution is built to, an estimate, a typical published result, or a proven one.
“demo” = seen in the working solution, on its sample book · “target” = the design goal, measured in the live solution · “estimated” = our estimate · “typical” = published figures (Fitch via Bloomberg Law — 6% US private credit default rate, 12 months to April 2026; Hebbia credit agreement software guide — 4–6 hours per agreement by hand, vendor-reported). Blocker definitions follow the Cleary Gottlieb and Octus blocker guides (2025). People, funds, borrowers and sponsors named on this page are fictional — characters and sample data in the working solution.
A review of each credit agreement in a book for the clauses that block liability management exercises — drop-downs that move assets to an unrestricted or non-guarantor subsidiary, and uptiers that put new money ahead of the existing loans. LME Protection Review grades the J.Crew, Pluralsight, Chewy, Serta, open-market purchase, waterfall, Incora and At Home protections for every loan and quotes the clause behind each grade.
The definition tracer reads each clause with the defined terms it depends on, and the blocker grader compares it with the fund's checklist: strong if it meets every element, weak if it is narrowed in scope, route or carve-out or is not a sacred right, missing if there is none. A J.Crew blocker that covers only Material Intellectual Property, or a Serta blocker that protects liens but not payment, is graded weak with the reason.
It reads each agreement as amended today. The agreement stacker applies every signed amendment, waiver and joinder in the order it took effect, and the amendment walk shows how a clause read at each stop, with deleted text struck through.
The request is read and held as pending, not applied — Corvane's request for Amendment No. 4 stays “not effective” until it is signed. It does raise a consent alert, and once a signed amendment arrives every saved question reruns and reports what changed.
Yes. The eight protections, what counts as strong for each, and which are must-haves are the fund's checklist. Counsel approves every change, each version is kept, and a new version regrades the book.
Yes. The basket calculator reads the investment, restricted payment and disposition baskets that reach an unrestricted or non-guarantor subsidiary, including the Available Amount, at EBITDA from the latest compliance certificate, and shows every basket in the total.
Yes. The agents grade and recommend asks; the portfolio manager decides what to raise and when; counsel approves every piece of drafting. No agent contacts a borrower, an administrative agent or a sponsor, and every question, grade change and ask is on the audit trail.
The Agentic Solution Engine builds and deploys it from your requirements and documents — your protection checklist, model clauses, position list and loan documents — and it goes live once every quality gate has passed. We will walk you through it on a sample of your own agreements first.
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1-min demoWe’ll run LME Protection Review on a sample of your own credit agreements and amendments.