Investor Redemptions Rise in Nontraded BDCs Amid Credit Concerns

Posted on February 4th, 2026 at 2:51 PM
Investor Redemptions Rise in Nontraded BDCs Amid Credit Concerns

From the desk of Jim Eccleston at Eccleston Law

Financial advisors and their clients have increased redemptions from nontraded business development companies (BDCs) following a series of high-profile corporate bankruptcies, according to InvestmentNews. The surge highlights growing investor concern about liquidity and credit exposure within these high-yield but often risky investment vehicles.

Nontraded BDCs provide loans to private companies, typically small- and mid-sized businesses that may struggle to obtain financing through traditional banks. These private credit funds gained traction following the 2008 financial crisis, when banks tightened lending standards. Brokerage firms recently have expanded sales of these products as investors pursued higher yields during periods of rising interest rates. InvestmentNews reports that major fund managers, including Blackstone and Ares, oversee several widely distributed BDC offerings.

According to InvestmentNews, investor anxiety intensified after the bankruptcies of car dealership Tricolor and auto parts supplier First Brands. Filings and independent reports indicated that certain BDCs and credit-focused interval funds held loans tied to those companies. One senior industry executive told InvestmentNews that clients reacted to the bankruptcies by reassessing portfolio diversification and liquidity risks, prompting increased redemption requests.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law

Return to Archive

TESTIMONIALS

Previous
Next

You were most helpful with my FINRA deposition. You are a good lawyer and a good person.

Dan B.

LATEST NEWS AND ARTICLES

February 4, 2026
Investor Redemptions Rise in Nontraded BDCs Amid Credit Concerns

Financial advisors and their clients have increased redemptions from nontraded business development companies (BDCs) following a series of high-profile corporate bankruptcies, according to InvestmentNews. The surge highlights growing investor concern about liquidity and credit exposure within these high-yield but often risky investment ...

February 3, 2026
FINRA Accuses Spartan Capital of Widespread Churning That Allegedly Harmed Customers

The Financial Industry Regulatory Authority (FINRA) has brought a disciplinary complaint against Spartan Capital Securities and several senior leaders of the New York City–based broker-dealer, alleging that the firm facilitated excessive trading that generated millions of dollars in revenue while causing substantial losses to customers.

February 2, 2026
California Investors Allege Unsuitable DST Recommendations in FINRA Arbitration

Two investors from the San Francisco Bay Area have filed a FINRA arbitration claim against brokerage firm Realized Financial and its financial advisors.