An Expert Q&A that examines the structural fault lines and legal risks emerging in the $1.8 trillion private credit industry following recent high-profile disruptions. This Expert Q&A reframes these events as a market correction that could lead to healthier, more sustainable growth. It explores the key challenges facing the market, including the liquidity mismatch inherent in certain business development company (BDC) structures, the risks of back leverage, software sector concentration, and net asset value (NAV) opacity. The discussion also addresses the increasing scrutiny from investors and regulators and the cross-border
complexities involving different US, UK, and EU regulatory frameworks, such as the Alternative Investment Fund Managers Directive (AIFMD) and European Long-Term Investment Fund (ELTIF) 2.0. This resource offers practical guidance for private credit funds, private equity sponsors, and banks on navigating the current environment, identifying structural conflicts, and understanding the strategic shift toward asset-based lending and other growing substrategies