Leveraged Loan LME Blockers for Lenders: Closing the Uptier and Drop-Down Routes Sponsors Still Use

This session teaches leveraged finance lender, arranger and agent counsel how covenant scorers deem J.Crew, Serta and Chewy blockers strong or weak. It also maps the 2025–2026 routes to the clauses that would have caught them, including Better Health and Oregon Tool’s extension carve-out, the Wesco votebuilding sequence and stacked-capacity drop-downs. Named blockers now appear in most broadly syndicated loans, but the presence count says little about coverage. To show why, the hour uses the strong-versus-weak tests covenant scorers apply and the routes sponsors actually used after December 2024: extend-and-exchange, vote-building debt issuance, and drop-downs through stacked investment capacity. The key topics are the prevalence baseline, analyzing a blocker as strong or weak, extend-andexchange through the extension carve-out, building the vote (debt issuance, then lien release), dropdowns through stacked investment capacity, variations on each blocker and the private-credit data gap. Attendees leave with a route-to-clause checklist and a list of data requests for their covenant subscription. With these, they can read a sponsor-precedent blocker in a live markup, find the open route in under ten minutes, and propose a fix the arranger can sell.

This one-hour session walks through the structure of the 4 main types of LMEs and accounts for the provisions that have historically permitted them. It covers the common provisions that make these transactions possible and what to look out for in negotiations. The guided markup takes a sponsorprecedent covenant package through the routes sponsors have actually used for the main types of LMEs. The key topics are pro rata sharing carve-outs (purchase, Dutch auction and extension offers), lien subordination versus payment subordination, J.Crew, Pluralsight, Envision and Chewy blockers, omniblockers and LME structure primer. Attendees leave able to read a blocker someone else drafted, know where to look in the credit agreement for other issues that amplify the risk, find the route the blocker leaves open, and propose a fix the arranger can sell to the sponsor.