Module deep-dive
Collateral carve-outs
Categories of assets excluded from the security package. Two material gaps in Trinseo's drafting: silence on material IP, and broad foreign-subsidiary exclusions.
Protection profile
Two material gaps: no IP-specific carve-in (J.Crew exposure) and broad foreign-subsidiary exclusion (Chewy-style dropdown exposure). Other carve-outs follow market.
No explicit carve-in. J.Crew-style transfer is structurally permitted.
§7 §7.05 →WeakForeign subsidiariesAll foreign Restricted Subs excluded — broader than market.
§7 §7.05 →ModerateExcluded accountsStandard payroll / withholding / fiduciary account carve-outs.
§7 §7.05 →ModerateReal estate thresholdReal property < $25M FMV excluded — at the cohort median.
§7 §7.05 →Trinseo sits in the 78th percentile because the IP and foreign-sub gaps compound — a sponsor could combine both mechanics in a single liability-management transaction.
Basket chain4 terms · 3 dependencies
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Wiki precedent3 cases
J.Crew Group, Inc. — 2017 IP Trapdoor
Material IP was not explicitly carved into the collateral package, allowing transfer to an Unrestricted Subsidiary at FMV. The IP carve-out gap is the structural weakness.
PetSmart / Chewy — 2018 Spin-Out
Chewy equity was held through a foreign holding structure that fell within the foreign-subsidiary carve-out. Transfer to Unrestricted Sub combined with the carve-out left lenders without recourse.
Envision Healthcare — 2020 Anesthesia Carve-Out
Anesthesia services line dropdown into Unrestricted Subsidiary — illustrates the same structural play as Chewy on a different asset class.
Precedents drawn from the public corpus (SEC filings, court opinions, market commentary). Other tenants' uploads are never used as comparables.
Evidence3 clauses
§7.05(a)p. 152
"The Borrower shall pledge, and shall cause each Restricted Subsidiary that is a Domestic Subsidiary to pledge, all of its property and assets, whether now owned or hereafter acquired, as Collateral for the Obligations, except for Excluded Property."
§7.05(d)p. 153
""Excluded Property" shall include (i) Equity Interests of any Foreign Subsidiary, (ii) any property the pledge of which would require governmental consent not obtained on commercially reasonable efforts, (iii) any deposit account holding only payroll, withholding, or fiduciary funds, and (iv) any real property with a Fair Market Value of less than $25 million."
§7.05(d)p. 154
"For the avoidance of doubt, Excluded Property shall not be construed to require the inclusion of Material Intellectual Property in the Collateral, except to the extent specifically provided in the Security Agreement."
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