LONDON, April 28 - An investor in a Blue Owl Capital Corporation vehicle has taken legal action in federal court in Manhattan, accusing the firm's investment adviser of breaching its fiduciary obligations by inflating the value of fund assets to extract excessive advisory fees.
The complaint, filed on Monday in the U.S. District Court in Manhattan by shareholder Richard Delman, names Blue Owl Credit Advisors LLC as the defendant and alleges that the adviser charged fees "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 under the Investment Company Act of 1940.
Central to the suit is the adviser’s simultaneous role of valuing assets for the business development company, referred to in the complaint as OBDC, while also earning fees that are calculated from those same valuations. The filing argues this dual role creates an inherent conflict of interest and a financial incentive to overstate asset values.
The complaint emphasizes that many of OBDC’s holdings are illiquid and classified as Level 3 assets under accounting rules. Because these investments lack observable market prices, their stated values are derived from internal valuation models rather than external market transactions, the filing says.
Delman points to a persistent divergence between OBDC’s reported net asset value and its share price on the public markets, noting that the publicly traded share price has fallen 22% over the past year. The complaint frames that gap as evidence the adviser systematically overstated asset values.
Another focal point of the lawsuit is the firm’s use of pay-in-kind, or PIK, interest. PIK interest accumulates as non-cash income that increases loan balances rather than being paid in cash. The complaint alleges the adviser collects fees on PIK income even when that income may never be realized in cash, effectively allowing fee collection on accruals that are uncertain.
The filing provides specific fee figures, stating that OBDC paid $414.4 million in advisory fees in 2025, an increase of roughly 47% from $282.4 million in 2021, and asserts that this rise occurred without a corresponding increase in services provided by the adviser.
Delman has asked the court to recover the fees he says were excessive and to rescind the advisory agreement between the parties. The complaint identifies Blue Owl Capital Corporation as being externally managed by Blue Owl Credit Advisors, the defendant in the suit, and describes that adviser as an indirect affiliate of Blue Owl Capital Inc.
A spokesperson for Blue Owl did not immediately respond to a request for comment, according to the filing.
Contextual note: The complaint is a civil filing alleging breaches of fiduciary duty and seeks monetary recovery and contractual relief. It presents valuation methodology, fee calculation practices, and the treatment of non-cash interest as central elements of the plaintiff’s case.