146 European companies have lost operational control to direct-lending funds after failing to repay debts, per Goldman Sachs analysis. This marks a stark shift in the $1.8 trillion private credit market, where opaque practices obscure true financial stress. Unlike US business development companies, European lenders rarely disclose portfolio valuations, leaving investors guessing about hidden risks.

In severe cases, lenders take keys from borrowers, seizing ownership and writing off loans in exchange for equity. While this strategy aids recovery, funds prioritize interest income over operational management.