In the span of roughly 90 days, a direct-to-consumer brand aggregator’s loan went from performing to worthless on the books of one publicly traded credit fund. Weeks later, a separate private-credit vehicle told three out of four investors who asked for their money back that they would have to keep waiting. The two events are unrelated, but the pattern they reveal is the same: when loans sour inside semi-liquid private-credit funds, investors can lose principal and lose the ability to walk away.
BlackRock TCP Capital Corp. (TCPC), a business development company listed on the Nasdaq, wrote its loan to Infinite Commerce Holdings down to zero in its annual report for the year ended December 31, 2025. As recently as the prior quarter, the position still carried a positive fair value. Separately, Blue Owl Credit Income Corp. completed its first-quarter 2026 share repurchase window and filled only about 23% of investor requests, according to a Schedule TO filed with the SEC.
Neither event, taken alone, points to a systemic breakdown. Together, though, they spotlight a vulnerability that has grown harder to dismiss as elevated borrowing costs squeeze overleveraged companies across the private-credit landscape.
TCPC’s Infinite Commerce write-down
Infinite Commerce Holdings operates under the consumer brand Razor and belongs to a wave of direct-to-consumer brand aggregators that raised debt aggressively during the low-rate years. TCPC’s quarterly filing for the period ending September 30, 2025, listed the Infinite Commerce loan at a positive fair value alongside its original cost basis. By the time the fund published its December 31, 2025 annual report, that value had been marked to zero. TCPC’s managers effectively concluded they did not expect to recover principal through restructuring, asset sales, or future cash flows.
A full write-down compressed into a single reporting period is significant for any BDC. These funds are required to mark their portfolios to fair value every quarter under generally accepted accounting principles. When a loan collapses that quickly, the hit to net asset value per share is immediate rather than gradual. TCPC’s annual report for the period showed a decline in NAV per share relative to the prior quarter, consistent with the Infinite Commerce loss and other portfolio movements during the period. That kind of erosion can constrain the fund’s capacity to pay dividends and deploy fresh capital, since BDCs must maintain minimum asset-coverage ratios under the Investment Company Act of 1940.
TCPC’s filings do not detail the operational triggers behind Infinite Commerce’s deterioration. No bankruptcy court records or borrower-level disclosures that would clarify the timeline have appeared in publicly available documents as of early May 2026. The accounting, however, tells a clear story: a loan that carried value in September was worthless by December, and TCPC’s shareholders absorbed the full loss.
Blue Owl’s redemption bottleneck
Blue Owl Credit Income Corp. is a non-traded fund that offers investors periodic liquidity through quarterly repurchase windows. Under the terms of its prospectus, the fund caps buybacks at 5% of outstanding shares per quarter. Because the fund is non-traded, the dollar value of that cap in any given quarter depends on the current NAV per share and the total share count at the time of the repurchase offer; the SEC filing for the first-quarter 2026 window specifies the exact number of shares eligible for repurchase. The structure is designed to balance investors’ desire for an exit against the practical reality that the underlying loans are long-dated and difficult to sell on short notice.
The first-quarter 2026 repurchase cycle pushed that design to its limit. According to the SEC filing, redemption requests far exceeded the 5% cap. The fund satisfied them on a pro-rata basis, filling roughly 23% of the total demand. In concrete terms, an investor who tendered 1,000 shares received cash for about 230 and kept the remaining 770, with no assurance that the next quarterly window would be any more generous.
A shareholder letter filed as an exhibit to the SEC characterized the proration as consistent with the fund’s design rather than a distress signal. Management noted that new capital continued to flow in during the quarter but acknowledged that repurchase requests outstripped what the 5% cap allowed. That kind of imbalance can feed on itself: investors who see a long queue may decide to submit their own redemption requests for the next window, compounding the pressure.
Heavy proration is not unprecedented in non-traded credit vehicles, but a fill rate below 25% stands out. During 2024, several large non-traded real estate funds faced similar dynamics. Blackstone Real Estate Income Trust, the most prominent example, repeatedly hit its own 5% quarterly cap as investors sought exits. The appearance of comparable pressure in private credit suggests the liquidity-mismatch problem has migrated across asset classes as sentiment has shifted.
Why the two events matter together
Private credit has expanded into a market that Preqin estimated at roughly $1.7 trillion globally as of late 2025, a figure that may have grown further by mid-2026 given continued fundraising activity across the sector. Much of that growth has been channeled into semi-liquid vehicles, structures that occupy a middle ground between fully locked-up private equity funds and daily-liquidity mutual funds. The sales pitch has been straightforward: earn private-market yields with the option to exit on a periodic basis.
The TCPC write-down and the Blue Owl proration expose the gap between that pitch and the mechanics underneath it. A single borrower default can erase a meaningful portion of a fund’s book value in one quarter. When enough investors take notice, the rush toward the exit can overwhelm the very liquidity mechanisms that were supposed to provide an orderly way out.
To be clear, most loans in most private-credit portfolios continue to perform. Default rates across the broader leveraged-lending market have been rising but, according to data tracked by the Morningstar LSTA Leveraged Loan Index through late 2025, remain below the peaks reached during the 2008 financial crisis and the early months of the pandemic. The concern is not that the entire asset class is failing. It is that the distance between a performing portfolio and a liquidity crisis can shrink faster than fund structures are built to handle.
Unanswered questions for TCPC and Blue Owl shareholders
Several material questions do not yet have public answers. TCPC has not disclosed the specific financial or operational triggers that drove Infinite Commerce Holdings from a performing loan to a total loss in roughly 90 days. Blue Owl has not attributed its redemption surge to any single credit event, leaving open whether investors were reacting to portfolio markdowns, a specific default elsewhere in the book, or broader anxiety about the asset class fueled by media coverage and peer conversations.
No regulator has published an industry-wide accounting of private-credit losses covering the 2025-to-2026 period. The SEC has signaled increased scrutiny of non-traded fund liquidity practices, but formal enforcement actions or rulemaking tied to these specific events have not materialized as of May 2026. The evidence available consists of individual fund filings, isolated write-downs, and liquidity constraints like Blue Owl’s prorated buyback. Taken together, they point to rising strain in pockets of the market without yet proving widespread distress.
For investors still holding shares in semi-liquid credit funds, the practical lesson is blunt: the line between a paper loss and a hard limit on getting money back can be far thinner than the offering documents suggest. And once that line blurs, the queue to leave only gets longer.
