Can't Get Your Money Out of a Non-Traded Business Development Company or Private Credit Fund? What Investors Can Do
By Daren A. Luma | October 21, 2026
If you asked to cash out of a non-traded Business Development Company ("BDC") or a private credit interval fund this year and got back only a fraction of what you requested, you are not alone. Non-traded BDC redemption limits are now hitting retail investors across the industry, and many of them bought these funds as a source of steady income. A redemption limit by itself is not a legal claim, but how the product was recommended to you may be. If a broker or financial adviser put retirement money you needed into an illiquid fund without explaining the risks, you may be able to recover your losses. Call (914) 304-4051 for a free consultation.
What is happening with non-traded BDCs and private credit funds
BDCs and interval funds are "semi-liquid" funds. They lend to or invest in private companies, and unlike a mutual fund or a stock, you cannot sell your shares any day you choose. Instead, the fund offers to buy back a limited amount of shares at set times.
According to a Federal Reserve staff note published October 14, 2026, interval funds must offer to repurchase at least 5% of their shares at each interval, while non-traded BDCs typically cap repurchases at about 5% of net asset value per quarter, and those programs may be modified or suspended (Federal Reserve, "The Rise of Semiliquid Funds for Retail Investors").
When more investors want out than the cap allows, everyone gets a prorated share. The recent numbers show how big that gap has become:
Across 19 non-traded NAV BDCs, investors asked to withdraw about $13.8 billion in the third quarter of 2026. Sponsors paid out about $5.6 billion, roughly 40%, leaving about $8.2 billion unmet, according to Robert A. Stanger & Co. data reported by Interval Fund Daily.
At Blue Owl Technology Income Corp., redemption requests equaled 39% of shares outstanding. With a 5% cap and pro rata fills, that works out to roughly 13 cents for every dollar shareholders sought, per the same report.
On October 16, Interval Fund Daily reported that Cliffwater Corporate Lending Fund capped third-quarter repurchases at 5% while requests reached 16%, and that Cantor Fitzgerald Income Trust, a non-traded REIT, prorated redemptions for the 10th straight month, filling 27% of September requests (Interval Fund Daily).
For an investor who needs that money for living expenses, medical bills, or a required minimum distribution, "you'll get some of it next quarter" is not much comfort.
Is a redemption limit a legal claim?
Usually not on its own. The repurchase limits are written into the prospectus, and a fund that follows its own rules has not necessarily done anything wrong. Market declines are not claims either.
The question is whether the person who sold you the investment did their job. Many of these products were sold through brokerage firms and investment advisers to retirees and conservative investors who were looking for income. That is where liability can arise.
Unsuitable or not in your best interest
Under the SEC's Regulation Best Interest and FINRA Rule 2111 (suitability), a brokerage firm must have a reasonable basis to believe a recommendation fits your specific investment profile, including your age, liquidity needs, time horizon, and risk tolerance. FINRA has told firms that complex products call for heightened care (FINRA Regulatory Notice 22-08). An illiquid private credit fund may be a poor fit for an investor who needed access to cash or could not afford to have money locked up.
Misrepresenting liquidity or risk
If you were told you could "get out anytime," that the fund was "like a CD" or "like a bond fund," or that the distributions were guaranteed, the risks may have been misrepresented or left out. FINRA's investor guide to interval funds warns that these funds are not liquid the way mutual funds are.
Overconcentration
Even a reasonable product can become unsuitable when too much of your account is in it. Putting a large share of a retiree's savings into one or two illiquid alternative investments is a common red flag.
Failure to supervise
Brokerage firms must supervise their brokers under FINRA Rule 3110. When a broker sells too much of an illiquid product to customers who should not have it, the firm itself may be responsible.
Investment advisers (RIAs) and fiduciary duty
If a registered investment adviser, rather than a broker, put you in the fund, that adviser owes you a fiduciary duty under the Investment Advisers Act. Claims against RIAs are often heard in private arbitration, such as AAA or JAMS, under your advisory agreement, rather than at FINRA.
Warning signs your investment may have been mis-sold
You are retired or near retirement and the fund holds a large part of your savings.
You told your broker or adviser you might need the money within a few years.
You were not told about quarterly repurchase caps, proration, or the chance of a suspension.
The pitch focused on the monthly distribution rate rather than the risks.
You did not receive or were not walked through the prospectus.
Several of your holdings are non-traded or private investments.
What to do now
Gather your documents: account statements, the subscription agreement, the prospectus, any repurchase or tender offer letters, and emails or notes from conversations with your broker or adviser.
Write down what you were told about liquidity and risk, and when, while it is fresh.
Check your broker on FINRA BrokerCheck for prior customer complaints.
Be careful with low-priced tender offers. Some third parties offer to buy shares well below their stated value. Talk to an attorney before accepting one, because it can lock in a loss.
Watch the deadline. FINRA Rule 12206 generally bars claims filed more than six years after the event that gave rise to the claim, and state statutes of limitations can be shorter.
How I can help
I represent retail investors nationwide in FINRA arbitration against brokerage firms, in arbitration against investment advisers, and in court. Before I began representing investors, I served as in-house counsel for a major brokerage firm and worked at one of the largest defense law firms in the world, so I know how brokerage firms evaluate and supervise products like these. The consultation is free, and my firm is paid only if you recover.
If you can't get your money out of a non-traded BDC, private credit interval fund, or non-traded REIT, contact me for a free consultation or call (914) 304-4051.
Frequently asked questions
Can I sue because my BDC limited redemptions?
Not usually for the limit alone, since it is disclosed in the fund's documents. A claim may exist against the broker or adviser who recommended it if the investment was unsuitable for you, the risks were misrepresented, or your account was overconcentrated.
Will I eventually get my money back?
It depends on the fund. Prorated repurchases may continue for months, and the share value can change. No one can promise when, or at what price, you will be able to exit.
Where would my claim be heard?
Claims against FINRA-registered brokerage firms are usually heard in FINRA arbitration. Claims against registered investment advisers often go to AAA or JAMS arbitration under the advisory agreement, and some claims go to court.
How long do I have to bring a claim?
FINRA's eligibility rule is generally six years, but state statutes of limitations may be shorter. Talk to an attorney soon.
What does it cost to talk to you?
The consultation is free, and my firm is paid only if you recover.
Attorney Advertising. This post is for general information only and is not legal advice. Reading it does not create an attorney-client relationship. Prior results do not guarantee a similar outcome. Daren A. Luma, PLLC, 75 South Broadway, Suite 400, White Plains, NY 10601, (914) 304-4051.
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