Insights from Ropes & Gray’s 2026 Credit Funds Forum

Ropes & Gray hosted the 2026 Credit Funds Forum on May 20 in New York, bringing together over 160 credit professionals to discuss current trends and the outlook for the credit market. The forum featured panels on a variety of topics, including distress and restructuring, developments in retail alternatives, regulatory updates, new fund products, and more. Here are some key takeaways from the panels.

Playbook for Distress: Proven Tactics from Top Practitioners

Finance partner Eliza Riffe Hollander and global chair of the firm’s business restructuring practice, Rachel Strickland, co-moderated a panel featuring Eugene Fialkovskiy (Managing Director, Senior Counsel), of King Street, Jonathan Ostrzega (Managing Director, Legal Affairs, Private Markets) of PSP Investments, and Greg Seketa (Managing Director and Head of Special Situations) of J.P. Morgan Asset Management.

• Monitoring investments for early warning signs of distress is important, including unusual trading prices and volume, management turnover, and deteriorating liquidity metrics.
• Have candid sponsor conversations and involve restructuring counsel early. Earlier detection preserves optionality and reduces time and expense.
• Due diligence in distressed situations should focus on anticipating what can go wrong. Key considerations include document flexibility, creditor dynamics, process outlook, evaluating management and covenant package strength.
• Scrutinizing definitions and collateral packages to identify flexibility within credit agreements is essential. Relationships should be approached strategically, liability management trends analyzed holistically, and sponsor motivations assessed realistically.
• A recent study comparing in-court and out-of-court restructurings suggests that companies who engage in out-of-court liability management exercises often end up filing for bankruptcy regardless, underscoring the need to optimize recovery, maintain process control, and understand fiduciary duties rather than reflexively avoid Chapter 11.
• Investing across the capital structure presents challenges, including managing conflicts and recognizing that information functions as both a tool and a commodity.
• Emerging trends include the rise of multi-jurisdiction restructurings, a growing number of international businesses exploring Chapter 11, creditor groups assembling narrow majorities to exert control, and new money providers commanding historically high backstop fees.

Developments in Retail Alternatives

Litigation and enforcement partner Amy Roy moderated a panel featuring M&A partner Ariel Deckelbaum, asset management partner Keith MacLeod, and ERISA and benefits partner Josh Lichtenstein.

• Asset management has evolved through three distinct phases—from early single-strategy fund formation to today’s landscape marked by margin compression, convergence between traditional and alternative managers, and record M&A transaction volumes.
• Strategic partnerships between traditional and alternative managers are surging, raising commercial, structural, and regulatory considerations, including exclusivity negotiations, affiliation risks, and the design of adviser/sub-adviser and fund-of-funds structures. Recent regulatory developments facilitating these partnerships include simplified co-investment orders and no-action relief extended to open-end funds. These collaborations can serve as either an alternative to, or a stepping stone toward, full acquisitions.
• The recent Executive Order directing the DOL to broaden 401(k) access to alternatives has resulted in a proposed regulation establishing a six-factor safe harbor for plan sponsor fiduciaries. Practical access structures include primarily target date funds and managed accounts.
• Recent sector disruption includes Saba Capital’s activist campaigns targeting non-traded BDCs (warranting attention to available defensive measures available in fund governing documents), and a novel Section 36(b) excessive fee lawsuit challenging an adviser’s valuation of private credit assets that we are seeing replicated across the BDC space.

Key Global Regulatory Issues for Credit Fund Managers

Co-head of the global securities and futures enforcement practice Eva Carman was joined by asset management partner Nicole Krea, private funds regulatory partner Eve Ellis, and asset management and derivatives partner Anna Lawry.

• The SEC continues to focus on credit fund managers—particularly those managing BDCs—with enforcement priorities including insider trading, valuations, and fees. State, DOJ, and foreign regulators are expected to play an increasingly prominent role.
• The exam process has become increasingly transparent, with staff sharing concerns through pre-exit letters before an exam concludes, presenting a meaningful opportunity for advisers to engage early.
• Top regulatory concerns include fees and expenses, AI, insider trading, and valuations. AI usage in the investment process will draw increasing scrutiny, and AI prompts may not be privileged absent attorney involvement.
• Valuations remain a priority on both sides of the Atlantic, with the UK's FCA placing the topic at the top of its focus list following a deep dive into private market valuations.
• The panel discussed the European Commission’s draft of SFDR II and advised managers launching new funds to consider its implications and build in robust risk factors and disclosures.
• Additional topics included new AIFMD II rules including those relating to open-ended fund liquidity management requirements and risk retention rule, upcoming changes to EMIR clearing thresholds, UK/AIFMD II periodic reporting on loan portfolio composition, and proposed U.S. Form PF amendments adjusting reporting thresholds and potentially introducing a private credit fund definition.

Key Developments in Fund Products

Ropes & Gray asset management partner Laura Hirst moderated a panel featuring Matthieu Wharmby, finance partner at Ropes & Gray, Joshua Levinson (Vice Chair & Chief Legal Officer) at Golub Capital, and Ahmet Yetis (Senior Managing Director) in the private capital advisory group at Evercore.

• The credit funds landscape has evolved significantly, with managers increasingly looking beyond traditional drawdown vehicles to products such as evergreen funds, rated note funds and collateralized fund obligations.
• When considering launching new products managers must assess whether their strategy is genuinely suited for the product in light of structure and terms investors will expect.
• Evergreen structures continue to gain prevalence as managers balance offering investors liquidity features against the liquidity profile of underlying strategies.
• Collateralized fund obligation growth has been driven by investor demand for leverage exposure and managers seeking to broaden their investor base.
• Continuation vehicles and similar structures—once concentrated in private equity—have increasingly migrated to the credit space, and managers are innovating new products to capitalize on current market conditions.

Please reach out to your regular Ropes & Gray contact or reach out to us (information below) if you would like to discuss any of the topics outlined above.