An investor in Apollo Debt Solutions asked for his money back in January. It is now September. Apollo says investors have received about 75 cents of every dollar they requested. The fund's instructions: resubmit. Next window: December.

I can't stop thinking about this. This is not a crypto blowup. This is not a penny stock. This is Apollo. Twenty-six billion dollars in assets. The kind of fund your broker called a bond replacement with quarterly liquidity. And nine months later, the guy still does not have all his money.

You might own Apollo (APO). Or Blackstone (BX). Blue Owl. KKR. Ares (ARES). These are the firms running the gated funds. APO is down about 18% from its 52-week high. FS KKR has fallen around 28% in the past year. Fee income at these companies depends on money staying in the fund. When investors line up to leave, the business model cracks. Maybe you bought a non-traded BDC through a broker. Maybe someone you know did. This is the structure trapping their cash right now.

Non-traded BDCs grew from zero in 2021 to over $200 billion today. They were sold to retirees as a step up from bonds. Higher yield. Steady income. You can get your money back every quarter. That was the pitch. The catch was buried in the prospectus. The fund can cap payouts at 5% of shares per quarter. If more than 5% want out, everyone gets a slice and has to resubmit. For years it did not matter. Nobody wanted to leave. Now everybody does. And that is when the math turns against you.

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I don't think most people realize what happens to the money that does not get out. In Apollo's latest quarter, 14.7% of shares were put up for redemption. Only 5% of shares got paid out. Each person got roughly 34 cents of every dollar they requested. The rest did not vanish. It rolled into next quarter's line. New requests stacked on top. If demand stays above 5%, the queue never shrinks. It grows. Apollo hit its cap three straight quarters. First 11.2% asked to leave. Then 16.8%. Then 14.7%. Each time, only 5% got through the gate.

Apollo is not even the worst case. Ten of sixteen BDCs tracked by Fitch breached their caps in Q2 alone. Blackstone's $79 billion BCRED fund got hit. Ten percent asked. Five percent got paid. Ares Strategic Income saw 14.4% ask. Same 5% wall. Blue Owl's tech fund, OTIC, is the most extreme. 38.1% of investors asked to leave in Q2. At a 5% cap, a full exit would take years. Across the whole industry, investors asked for $15.6 billion back in Q2. They got $5.9 billion. The rest is in a queue. Robert A. Stanger tracks these funds. Their data shows cash-out requests hit 12.4% of total fund value. The highest reading they have ever recorded.

Here is what worries me. The money sits in line. The value inside these funds is falling. Blue Owl OTIC's net asset value dropped from $10.38 per share to $9.70 in six months. The fund swung from $133 million in profit to a $77 million loss. Mutual funds marked some of the same software companies down around 50%, while Blue Owl's own marks were gentler. The fund's value falls. The 5% cap lets fewer dollars out each quarter. That makes the wait longer. Longer waits push more people to ask for their money. More requests mean a longer line. That is a doom loop. And nobody knows when it stops.

In August 2025, President Trump signed an executive order. It opens the door for 401(k) plans to hold private credit. The big firms have been pushing hard to tap that pool. There is $12 trillion in our 401(k) plans. The structure they would use is the same one gating investors right now. A non-traded BDC with a 5% cap. I get it. Higher yield sounds great at the kitchen table. But the fine print has not changed. Blackstone's real estate fund BREIT hit this same wall a few years back. The gate stayed shut for 15 months.

Lloyd Blankfein told Bloomberg: "I don't feel the storm, but the horses are starting to whinny in the corral."

The number I can't shake is $9.7 billion. That is how much cash is stuck in line at private credit funds after Q2 alone. Not a forecast. Not a model. Real money from real people who asked to leave and were told to wait. The highest figure Stanger has ever recorded. You can say that number at the golf course tomorrow and watch the table go quiet.

I keep thinking about Jonathan Bock. He was co-CEO of Blackstone's $79 billion private credit fund. He resigned this year. He walked out the door. The investors in his fund are still waiting for theirs to open.

More on this tomorrow.

— American Ledger