Key Takeaways
- • Private credit assets under management have grown to over $2 trillion globally, but the sector now faces simultaneous stress from investor redemptions and bank pullback from back-leverage, according to Thomson Reuters Regulatory Intelligence.
- • Apollo capped redemptions at 5% of its $15 billion Apollo Debt Solutions fund after requests reached 17% of fund value in June 2026.
- • Partners Group capped redemptions on its $8.6 billion Global Value SICAV after requests hit roughly 9.8% of NAV against a 5% quarterly cap, and warned a $15.8 billion Delaware-domiciled fund could face similar restrictions.
- • The collapse of UK lender Market Financial Solutions (MFS) in February 2026 caused losses of £228 million at Barclays, a $400 million HSBC impairment via Apollo-backed Atlas SP, and $267 million in Santander exposure, with the FCA investigating.
- • The article maps the most likely dispute categories: gating decisions, valuation challenges, disclosure and mis-selling claims, and bank back-leverage disputes.
Summary
The private credit market, which has grown to over $2 trillion in assets under management globally, is facing what commentators describe as a period of reckoning, according to Alasdair Glass's analysis published in Thomson Reuters Regulatory Intelligence. Investors are seeking redemptions and finding their holdings less liquid than expected, while banks that provide back-leverage to credit firms are pulling back from riskier exposures. Glass argues that the convergence of these pressures could generate a significant wave of disputes.
In the United States, redemption pressure swept through the sector in the first half of 2026, with Apollo, BlackRock, Blue Owl and others imposing or tightening gates. In June 2026, redemption requests at the $15 billion Apollo Debt Solutions fund reached 17% of fund value, prompting Apollo to cap redemptions at 5%. On 3 June 2026, Partners Group capped redemptions on its $8.6 billion Global Value SICAV, a European evergreen private equity vehicle, after withdrawal requests reached approximately 9.8% of NAV. Partners Group subsequently warned that a $15.8 billion Delaware-domiciled fund could face similar restrictions. Redemption requests have been linked to investor concern about fraud, loan losses, AI-driven disruption in the software sector, and downgrades of loan values by credit funds and their bank lenders.
Bank lending is also tightening. HSBC told clients it would not provide back-leverage for riskier private credit funds, and Barclays' chief executive said the bank was "constraining lending to certain structured finance counterparties who operate more vulnerable business models." The collapse of Market Financial Solutions, a UK specialist mortgage lender with a £2.4 billion loan book, in February 2026 amid fraud allegations illustrates the fragility of this model. Creditors alleged an 80% deficiency in verifiable collateral. Barclays took a £228 million hit, HSBC reported a $400 million impairment incurred through Apollo-backed Atlas SP, and Santander disclosed $267 million in exposure. The FCA has launched a formal investigation. The ECB Supervisory Board Chair has warned that links between banks and private credit create channels through which shocks can be transmitted across the financial system.
The article identifies investor claims as the most likely dispute category, covering gate operation, valuation and disclosure. Gates protect against distressed forced sales, but managerial discretion over them may invite challenges on rationality and good faith, particularly where managers or affiliates redeem their own holdings or where institutional investors receive preferential treatment. Pro rata redemption mechanics may also reward inflated requests. Disclosure claims may focus on whether investors were told about back-leverage dependence, concentration risk and gating circumstances, as products once reserved for institutions reach retail and wealth clients. Valuation is described as the fault line beneath many disputes. Grizzly Research alleged in April 2026 that up to 40% of assets in a Partners Group evergreen fund were materially misvalued, which Partners Group rejected as frivolous and defamatory while announcing litigation against Grizzly. BlackRock's TCP Capital Corp reported Q4 2025 write-downs reducing NAV by 19%. Bank disputes may also arise over facility renewals, margin calls and collateral markdowns, with the Braganza duty requiring good-faith exercise of discretionary rights. Glass recommends that managers audit documentation and valuation governance, that banks document collateral decisions, and that investors preserve evidence of representations made.
In the United States, redemption pressure swept through the sector in the first half of 2026, with Apollo, BlackRock, Blue Owl and others imposing or tightening gates. In June 2026, redemption requests at the $15 billion Apollo Debt Solutions fund reached 17% of fund value, prompting Apollo to cap redemptions at 5%. On 3 June 2026, Partners Group capped redemptions on its $8.6 billion Global Value SICAV, a European evergreen private equity vehicle, after withdrawal requests reached approximately 9.8% of NAV. Partners Group subsequently warned that a $15.8 billion Delaware-domiciled fund could face similar restrictions. Redemption requests have been linked to investor concern about fraud, loan losses, AI-driven disruption in the software sector, and downgrades of loan values by credit funds and their bank lenders.
Bank lending is also tightening. HSBC told clients it would not provide back-leverage for riskier private credit funds, and Barclays' chief executive said the bank was "constraining lending to certain structured finance counterparties who operate more vulnerable business models." The collapse of Market Financial Solutions, a UK specialist mortgage lender with a £2.4 billion loan book, in February 2026 amid fraud allegations illustrates the fragility of this model. Creditors alleged an 80% deficiency in verifiable collateral. Barclays took a £228 million hit, HSBC reported a $400 million impairment incurred through Apollo-backed Atlas SP, and Santander disclosed $267 million in exposure. The FCA has launched a formal investigation. The ECB Supervisory Board Chair has warned that links between banks and private credit create channels through which shocks can be transmitted across the financial system.
The article identifies investor claims as the most likely dispute category, covering gate operation, valuation and disclosure. Gates protect against distressed forced sales, but managerial discretion over them may invite challenges on rationality and good faith, particularly where managers or affiliates redeem their own holdings or where institutional investors receive preferential treatment. Pro rata redemption mechanics may also reward inflated requests. Disclosure claims may focus on whether investors were told about back-leverage dependence, concentration risk and gating circumstances, as products once reserved for institutions reach retail and wealth clients. Valuation is described as the fault line beneath many disputes. Grizzly Research alleged in April 2026 that up to 40% of assets in a Partners Group evergreen fund were materially misvalued, which Partners Group rejected as frivolous and defamatory while announcing litigation against Grizzly. BlackRock's TCP Capital Corp reported Q4 2025 write-downs reducing NAV by 19%. Bank disputes may also arise over facility renewals, margin calls and collateral markdowns, with the Braganza duty requiring good-faith exercise of discretionary rights. Glass recommends that managers audit documentation and valuation governance, that banks document collateral decisions, and that investors preserve evidence of representations made.
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