Non-Traded BDC Redemption Gates 2026 | Investor Losses
Investors trying to get money out of non-traded business development companies (BDCs) are running into a wall in 2026. Blue Owl, FS KKR, and Blackstone have all imposed redemption limits — commonly called “gates” — that cap how much investors can withdraw each quarter, even as the funds themselves report widening losses and dividend cuts. For investors who were told these products offered steady income with periodic liquidity, the current squeeze looks very different from the pitch. Investors who believe a non-traded BDC was recommended to them without adequate disclosure of these liquidity risks may want to speak with a FINRA arbitration attorney about their options.
What Is Happening With Non-Traded BDCs in 2026
Non-traded BDCs are structured to allow investors to redeem a portion of their shares each quarter, typically capped around 5 percent of net asset value (NAV). That structure works as intended when redemption requests are modest. In 2026, they haven’t been. According to industry trade press, tender requests across several large non-traded BDCs and interval funds reached roughly 9.8 to 10 percent of NAV in the second quarter of 2026 — nearly double the standard 5 percent cap — forcing sponsors to prorate withdrawals. Investors attempting to redeem reportedly received a fraction of what they requested, described by some trade outlets as approximately 62 cents on the dollar.
Blackstone Private Credit Fund (BCRED) reportedly returned about $3.7 billion to investors in the first quarter of 2026, equal to roughly 7.9 percent of its total assets — well above its stated 5 percent redemption limit. BlackRock, Blackstone, and Blue Owl vehicles reportedly gated redemptions in the same quarter. These figures are drawn from industry and trade press coverage rather than SEC filings, and investors should treat specific percentages as estimates pending confirmation from each fund’s own disclosures.
Ares Strategic Income Fund (ASIF), another large non-traded BDC, illustrates a related pressure point: unsolicited buyers looking to capitalize on the liquidity squeeze. In July 2026, ASIF’s board rejected an unsolicited mini-tender offer from Cox Capital Partners priced roughly 14% below the fund’s reported NAV, urging shareholders not to tender their shares. The offer arrived on the heels of ASIF’s own second-quarter tender offer, in which the fund capped repurchases at 5% of outstanding shares despite redemption requests covering 14.4% of shares outstanding. Investors evaluating any unsolicited offer for shares in Ares Strategic Income Fund or other non-traded BDCs should compare the offer price to the fund’s most recently published NAV before responding.
HPS Corporate Lending Fund, a non-traded BDC advised by BlackRock-owned HPS Investment Partners, shows a similar pattern. In July 2026, its board rejected an unsolicited mini-tender offer from Cox Capital Retail Secondaries Fund I, L.P. priced roughly 25 percent below the fund’s published NAV — a steeper discount than the Cox Capital offer ASIF’s board rejected. The offer followed trade press reports that the fund’s own second-quarter repurchase requests reached approximately 13.3 percent of shares outstanding, well above its 5 percent quarterly cap.
Blue Owl and FS KKR Report Losses, Cut Payouts
Underlying the liquidity squeeze are declining fund results. Per SEC filings, Blue Owl Technology Finance Corp. reported GAAP net investment income of $0.37 per share for the quarter ended March 31, 2026, offset by net realized and unrealized losses of $0.84 per share — a net decrease in assets from operations of $0.47 per share.
FS KKR Capital Corp., the BDC affiliated with KKR, cut its quarterly dividend from $0.70 to $0.48 per share amid rising non-accrual rates, reported at approximately 5.5 percent of the portfolio, and a fourth-quarter net loss of roughly $114 million as reported in trade press. Moody’s subsequently downgraded FS KKR to junk status (Ba1, down from Baa3). Software-sector exposure was cited as a factor in both the ratings action and the broader BDC selloff, following a string of high-profile corporate bankruptcies among private credit borrowers.
Why This Matters for Investors Who Were Sold These Products
Non-traded BDCs are illiquid, high-fee alternative investments that are generally suitable only for investors who can tolerate the loss of principal and extended holding periods without access to their capital. Brokerage firms and financial advisors are required under FINRA rules to perform reasonable due diligence and recommend these products only to investors for whom they are suitable, and to adequately disclose the liquidity and redemption risks involved.
Investors who allege they were told non-traded BDCs offered dependable quarterly liquidity, or who were not adequately informed of the redemption caps, concentration risk, or fee structure, may have grounds to pursue a claim against the recommending broker-dealer. These allegations would need to be evaluated on the specific facts of each investor’s account and disclosures received at the time of purchase.
Recovering Losses Through FINRA Arbitration
Most disputes between investors and brokerage firms over unsuitable recommendations are resolved through FINRA arbitration rather than court litigation, since most brokerage account agreements require arbitration. The process typically takes 12 to 18 months and can result in recovery of principal losses, along with interest, depending on the facts of the case. Investors who purchased non-traded BDCs and are now facing redemption gates or declining valuations may want to consult with a FINRA arbitration attorney to evaluate whether their account was handled appropriately.
Frequently Asked Questions
What is a redemption gate on a non-traded BDC?
A redemption gate is a limit a fund imposes on the total amount of shares it will repurchase in a given quarter, typically capped at a set percentage of NAV. When investor redemption requests exceed that cap, the fund prorates the amount paid out to each investor rather than honoring requests in full.
Can I still sell my non-traded BDC shares if my fund has gated redemptions?
Non-traded BDCs generally have no public trading market, so redemption through the fund’s own repurchase program is typically the only exit option. When that program is gated or suspended, investors may have very limited ability to access their capital until the fund lifts the restriction or a liquidity event occurs.
How do I know if I have a claim against my broker over a non-traded BDC?
Whether a claim exists depends on facts such as what was disclosed at the time of purchase, whether the investment was suitable given your financial situation and objectives, and whether the recommending firm met its due diligence obligations. An attorney experienced in FINRA arbitration can review your account statements and disclosure documents to assess your options.
Contact The White Law Group
The White Law Group is a national securities fraud law firm representing investors in claims against brokerage firms and financial advisors, with offices in Chicago and Seattle. If you have questions about a non-traded BDC investment or believe you may have a claim, contact The White Law Group for a free consultation at (888) 637-5510.
