BlackRock unit among lenders hit by $500 million alleged private-credit fraud. The Wall Street Journal (gated) reports.
BlackRock’s private-credit arm and several other lenders are seeking to recover over $500 million after what they describe as a “breathtaking” case of fraud in the opaque U.S. private-credit market.
The lenders accuse Bankim Brahmbhatt, owner of Broadband Telecom and Bridgevoice, of fabricating accounts receivable used as collateral for loans. The group filed suit in August, alleging the companies owe them more than $500 million. Brahmbhatt has denied wrongdoing.
People familiar with the matter said BNP Paribas helped BlackRock’s HPS Investment Partners finance the loans. The dispute highlights risks in asset-based finance, a niche corner of private credit where loans are backed by business revenues or receivables.
The case follows recent collapses in the sector, including First Brands and Tricolor, which were accused of pledging fictitious assets before going bankrupt. The latest allegations have added to concerns over lax oversight and mounting risks in the $1.7 trillion private-credit industry.
---
The alleged $500 million fraud deepens concerns over systemic risks in the fast-growing private-credit market, a $1.7 trillion sector that increasingly substitutes for traditional bank lending. Analysts warn that weak transparency, rapid expansion, and cross-linkages with major institutional investors could amplify credit-market contagion if similar cases emerge.
The episode reinforces calls for tighter oversight and may heighten market sensitivity to corporate-lending quality, particularly in asset-backed and non-bank finance segments already under strain from rising defaults and slower growth.
