On April 27, 2026, investor Richard Delman filed a lawsuit in the U.S. District Court for the Southern District of New York against Blue Owl Credit Advisors LLC, the external manager of Blue Owl Capital Corporation (OBDC). The complaint accuses the adviser of breaching its fiduciary duties by inflating the value of OBDC’s Level‑3 assets and charging excessive advisory fees.
Delman alleges that the adviser’s dual role—valuing OBDC’s assets while earning fees tied to those valuations—created a conflict of interest that led to systematic overstatement of asset values. The lawsuit claims that OBDC paid $414.4 million in advisory fees in 2025, a 47% increase from $282.4 million in 2021, without a corresponding increase in services. The complaint further points to the use of internal models for Level‑3 assets, which lack observable market prices and grant the adviser significant discretion, and to the inclusion of pay‑in‑kind (PIK) interest as a non‑cash income source on which fees are calculated.
Level‑3 assets are valued using unobservable inputs that are significant to fair value, meaning the adviser relies on internal models and assumptions rather than market data. This valuation method can create opportunities for overstatement, especially when the adviser’s compensation is linked to the valuation outcome. The lawsuit highlights that the adviser’s fee structure is tied to the value of these assets, amplifying the potential for inflated valuations to increase fee income.
OBDC’s publicly traded share price has declined about 22% over the past year, and as of April 14, 2026 the company trades at roughly a 27% discount to its net asset value. The persistent gap between NAV and market price, combined with the lawsuit’s allegations, raises concerns about the transparency and accuracy of OBDC’s valuation practices. A spokesperson for Blue Owl has not yet responded to a request for comment, leaving the adviser’s perspective unreported.
The lawsuit could trigger regulatory scrutiny and erode investor confidence. If the court finds that the adviser’s valuation practices were improper, OBDC may be required to recover excess fees and could face a restructuring of its advisory relationship. The case underscores the importance of independent valuation oversight and transparent fee arrangements in the business‑development‑company sector.
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