LONDON, U.K.: A shareholder in a Blue Owl Capital private credit fund has filed a lawsuit accusing the firm's investment adviser of overstating asset values to increase its own fees, raising questions about conflicts of interest in the fast-growing private credit sector.

The complaint, filed Monday in U.S. District Court in Manhattan, alleges that Blue Owl Credit Advisors LLC breached its fiduciary duties by charging fees tied to inflated valuations of fund assets. The case centers on Blue Owl Capital Corporation, a business development company that invests in private credit markets.

Richard Delman, an investor in the fund, said the adviser's fees violated the Investment Company Act of 1940 by charging amounts that were "so disproportionately large that they bear no relationship to the value of the services provided" and could not have resulted from arm's-length negotiations.

According to the lawsuit, the adviser's role in both valuing the fund's assets and earning fees based on those valuations created a built-in incentive to overstate asset values. Many of the fund's holdings are illiquid and classified as Level 3 assets, meaning they are valued using internal models rather than observable market prices.

Delman pointed to a persistent gap between the fund's net asset value and its publicly traded share price, which has fallen about 22% over the past year, as evidence that the valuations may be overstated.

The complaint also highlights the use of "pay-in-kind" (PIK) interest, a form of non-cash income that accrues to loan balances instead of being paid out. Delman alleges that the adviser collects fees on this income even though it may never be realized.

Advisory fees have risen sharply in recent years, the lawsuit claims. Blue Owl Capital Corporation paid $414.4 million in fees in 2025, up about 47% from $282.4 million in 2021, without a corresponding increase in services.

Delman is seeking to recover the alleged excess fees on behalf of the fund and to void the advisory agreement.

Blue Owl Capital Corporation is externally managed by Blue Owl Credit Advisors, which is an affiliate of Blue Owl Capital Inc. The company did not immediately respond to a request for comment.

The case underscores broader concerns about transparency and fee structures in private credit funds, where complex valuations and limited liquidity can make it difficult for investors to independently assess performance.