LONDON, April 28 (Reuters) – An investor in one of Blue Owl Capital’s private credit funds has filed a suit in New York accusing the company’s investment adviser of breaching its fiduciary duties by inflating the value of one of its funds to extract excessive fees, according to a complaint filed on Monday in the U.S. District Court in Manhattan.
Richard Delman, a shareholder in the business development company Blue Owl Capital Corporation, said the fees charged by Blue Owl Credit Advisors LLC breached its fiduciary duty under the Investment Company Act of 1940 by charging fees that were “so disproportionately large that they bear no relationship to the value of the services provided” and couldn’t have resulted from arm’s-length negotiations.
The complaint centers on the adviser’s dual role valuing OBDC’s assets while also earning fees tied to those valuations, creating an inherent conflict of interest and incentive to inflate assets. Because many of the fund’s investments are illiquid and classified as so-called Level 3 assets under accounting rules, their value was determined from internal models rather than market prices, the filing said.
A spokesperson for Blue Owl didn’t immediately respond to a request for comment.
Delman said the adviser systematically overstated asset values, pointing to a persistent gap between OBDC’s net asset value and its publicly traded share price, which is down 22% over the past year.
The lawsuit highlights the firm’s use of “pay-in-kind” interest, which is non-cash income that accrues to loan balances rather than being paid in cash. The complaint alleges that the adviser collects fees on PIK income even when it may never be realized.
OBDC paid $414.4 million in advisory fees in 2025, up roughly 47% from $282.4 million in 2021, without a corresponding increase in services, according to the complaint.
Delman seeks to recover the excessive fees on behalf of the fund and to rescind the advisory agreement.
Blue Owl Capital Corporation is externally managed by Blue Owl Credit Advisors, the defendant in this case, an indirect affiliate of Blue Owl Capital Inc..
(Edited by Dawn Kopecki and Vidya Ranganathan; Editing by Mark Porter)
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