Module deep-dive
Investments
Permitted Investment capacity. Restricted-Sub uncapped basket plus the J.Crew-style Unrestricted-Sub carve-out — material drop-down risk in this agreement.
Capacity waterfallFormulaic — upload financials to resolve
Restricted Subs
Uncapped
Investments in Restricted Subsidiaries — no cap
Builder basket
$617M
Available Amount, shared with §7.02 RP basket
Unrestricted Subs
Uncapped
J.Crew carve-out — at Fair Market Value of designated sub
Ratio test
—
No SSLR test on these baskets
Total available
Effectively uncapped
The Restricted-Sub and Unrestricted-Sub baskets are both uncapped. Dollar capacity here is bounded only by the borrower's asset base — upload financials and an org chart for a defensible number.
Basket chain6 terms · 5 dependencies
Read left-to-right: primitives feed into the module's subject term. Click any node to jump to its definition.
Wiki precedent3 cases
J.Crew — 2017 IP Drop-Down
Sponsor designated an Unrestricted Subsidiary, transferred material IP at FMV, and licensed it back — effectively moving the asset outside the collateral package. The original 'trapdoor' move and the canonical authority for this module's primary risk.
PetSmart / Chewy — 2018 Spin-Out
Equity of Chewy distributed via §7.03 Investment mechanics, then reinvested in an Unrestricted Sub. Lender litigation followed; court declined to reverse on the agreement's plain language.
Envision Healthcare — 2020 Anesthesia Carve-Out
KKR-led drop-down of anesthesia assets into an Unrestricted Subsidiary, funded via uncapped §7.03 Investment basket. Subsequent bankruptcy raised priming-risk questions for original lenders.
Precedents drawn from the public corpus (SEC filings, court opinions, market commentary). Other tenants' uploads are never used as comparables.
Evidence3 clauses
§7.03p. 141
"The Borrower shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, make any Investment, except for a Permitted Investment."
§7.03(b)p. 142
"Notwithstanding clause (a), Investments in Unrestricted Subsidiaries shall not be subject to any cap, provided that no Default or Event of Default has occurred and is continuing at the time of designation pursuant to §7.03(d). The designation of any Subsidiary as an Unrestricted Subsidiary shall constitute an Investment in an amount equal to the Fair Market Value of such Subsidiary at the time of designation."
§7.03(c)p. 143
"Investments shall further be permitted (i) in Restricted Subsidiaries without cap, (ii) pursuant to the builder basket under §7.02(g), and (iii) subject to the Senior Secured Leverage Ratio test as set forth in the definition of Permitted Investment."
Where to go next
Financials
The line items that resolve this module's capacity into dollar figures.
Scenario modeler
How this module's capacity translates into pre/post P&L on a transaction.
Redline view
Underlying clauses with defined-term chips and cross-reference peeks.
Capability map
Browse all 34 modules with gate-triple state.