As anticipated Oaktree Medical Centre filed for Chapter 7 liquidation, According to an AP news report, the filing occurred on September 23, 2019. That almost completes an unfortunate credit story that we’ve written about previously – punctuated by claims of massive fraud by the company brought by the DOJ – and which resulted in Fidus Investment (FDUS) having to write to zero its $13.4mn investment. The BDC may book the realized loss in the third quarter results or at year end, but with all the investment reserved and no income forthcoming, this one’s over.
Obviously for FDUS not a satisfying conclusion and which deserves some future discussion by investors and analysts as to whether there were warning signs of the fraud that due diligence or ongoing monitoring could have caught. Most likely the BDC’s managers would just like to forget this investment was ever made but there’s plenty to learn from a discussion of process and procedures even after the fact.