Blue Owl Adviser sued over private credit fund valuation
Blue Owl Credit Advisors LLC was sued in New York on Monday over alleged inflated fund valuations and excessive fees tied to illiquid assets.
Atlas Newsdesk ·
An investor has sued Blue Owl Credit Advisors LLC in New York, accusing the adviser of overstating the value of a private credit fund in order to collect higher fees.
The complaint was filed Monday in the U.S. District Court in Manhattan. It alleges the adviser breached fiduciary duties under the Investment Company Act of 1940, according to the filing.
Claims focus on OBDC valuations and advisory fees
The plaintiff, Richard Delman, is a shareholder in Blue Owl Capital Corporation (OBDC.N). He argues that the advisory fees paid were excessive and out of proportion to the services the adviser provided.
The lawsuit also points to a potential conflict of interest in how the fund’s assets are valued. Delman alleges the adviser both determines the value of OBDC’s illiquid Level 3 assets and earns fees linked to those valuations.
Level 3 assets and the alleged incentive to overstate value
Level 3 assets are described in the complaint as holdings that are not subject to market pricing. Because they are illiquid and lack observable market quotes, the lawsuit says the adviser’s role in valuing them creates an incentive to push valuations higher.
Delman claims this structure contributed to a 22% decline in OBDC’s publicly traded share price over the past year relative to its net asset value, as stated in the complaint.
Pay-in-kind interest and uncertainty over realization
The filing also highlights the use of “pay-in-kind” (PIK) interest, which is non-cash income that accrues to loan balances rather than being paid in cash at the time it is recorded.
Delman alleges the adviser collected fees on PIK interest even when the eventual realization of that income was uncertain, according to the complaint.
Fee growth cited in the lawsuit
The lawsuit says advisory fees paid by OBDC rose by about 47% over the period cited, increasing from $282.4 million in 2021 to $414.4 million in 2025. Delman alleges this increase was not matched by a corresponding rise in services.
As remedies, Delman seeks to recover the fees he describes as excessive and to rescind the advisory agreement, according to the complaint.