The private credit market has grown from a niche post-financial-crisis workaround into a $2 trillion asset class that now touches virtually every corner of institutional and, increasingly, retail finance. The commentary on that growth has been voluminous — the systemic risks, the opacity, the leverage, the looming maturity walls. What has been written about far less, and what warrants serious attention right now, is the question that inevitably follows any period of market stress: who gets sued, on what theory, and why?
That is the subject of the linked article. Private credit’s defining structural features — illiquid assets priced by the very managers who profit from those valuations, quarterly redemption windows increasingly strained by withdrawal pressure, BDC portfolios heavily concentrated in software companies now facing AI-driven disruption, and a regulatory push to route retirement savings into all of the above — have created an environment fraught with the potential for litigation. The first cases have already been filed. They are, in our view, a preview of what is coming.
The article maps five distinct categories of legal claims that are beginning to materialize: distress and insolvency litigation arising from capital structures built for a zero-rate world; securities fraud class actions against BDC managers for alleged NAV manipulation; fiduciary duty and ERISA exposure accelerated by a new Department of Labor rule opening 401(k) plans to private credit; redemption and gating disputes; and valuation and fee-related challenges that sit squarely in the SEC’s 2026 examination crosshairs. It also examines a pending Supreme Court case — Anderson v. Intel — that could fundamentally reshape the litigation landscape for private credit in retirement plans.
Read more here: https://www.quinnemanuel.com/the-firm/publications/client-alert-private-credit-under-stress-emerging-litigation-risks/