Hancock Park’s NAV Falls To $5.43, Still Above Its Estimated Liquidation Payout

A new non-accrual and the cost of drafting the wind-down plan pushed the BDC to a quarterly net investment loss, weeks after it gave up its only revolving credit line.

September 3, 2026

Hancock Park Corporate Income entered its second quarter still nominally an operating business development company and left it as something closer to a liquidation in progress. Net asset value per share fell to $5.43 at June 30 from $6.63 three months earlier, the Chicago-based non-traded BDC advised by OFS Advisor reported, and it now estimates stockholders will collect roughly $3.50 to $4.30 per share in total liquidating distributions. The gap between the carrying value and the expected payout is the figure advisors holding this fund for clients will care about most.

The quarter’s slide came almost entirely from marks rather than operations: a net loss on investments of $1.05 per share, a net investment loss of $0.09, and $0.03 of declared distributions. NAV stood at $7.65 at the end of 2025 and $10.21 at the end of 2024, and the board had already marked the shares down to $6.63 in April.

Stockholders vote on the plan of sale and dissolution at this year’s annual meeting. The board approved the plan on July 23 and simultaneously terminated the continuous private offering that had been open since August 2016, automatically ending the dealer manager arrangement with CCO Capital. The fund had not sold a share since June 2023.

Credit and CLO equity both deteriorated

Total investments finished the quarter at $19.9 million of fair value against $29.0 million of amortized cost, down from $29.8 million and $36.3 million at year-end, with the issuer count falling to 26 from 32. First lien debt accounted for $12.1 million of fair value, second lien for $3.7 million, and structured finance securities for $3.3 million against $8.0 million of amortized cost.

CLO equity supplied most of the quarter’s unrealized damage, with depreciation of $1.09 million on the structured finance book out of $1.03 million in total net unrealized depreciation after tax. Non-performing CLO positions are carried at $422,189 against $1.5 million of cost and accrue at a zero effective yield, because projected residual distributions no longer exceed amortized cost.

On the loan side, first lien exposure to One GI LLC went on non-accrual during the quarter at $1.45 million of cost and $1.20 million of fair value. Non-accruals now total $4.71 million of amortized cost and $1.67 million of fair value, or 8.4% of investments at fair value, up from 1.7% at March 31. The reversal of previously accrued interest on that credit, a smaller average portfolio and lower CLO effective yields cut interest income by $201,948 sequentially, and the weighted-average performing income yield on interest-bearing investments dropped to 10.6% from 11.7%.

An income statement that has flipped

Total investment income of $682,365 no longer covers a cost base that has not fallen as fast. Operating expenses rose to $816,020 from $739,479, partly on professional fees tied to evaluating and drafting the wind-down plan, leaving a net investment loss of $127,159 after a modest expense limitation benefit. The six-month figure remains marginally positive at $24,738, against $588,584 in the first half of 2025.

Including the investment losses and a $25,822 charge on debt extinguishment, the net decrease in net assets from operations was $1.72 million for the quarter and $3.17 million for the half. Net assets ended at $8.01 million, down from $11.52 million at the start of the year, with accumulated losses of $12.3 million now sitting against $20.3 million of paid-in capital.

A November maturity with no revolver behind it

The fund terminated its Banc of California revolver on June 29 after repaying the remaining $1.65 million, taking the $25,822 write-off of deferred financing costs and leaving itself without any revolving liquidity source. What remains is the $15 million unsecured note, fixed-rate and maturing November 27, against $3.9 million of cash and $396,990 of unfunded revolver commitments to portfolio companies. Asset coverage was 153% at quarter-end, against a 150% statutory minimum. The company gave notice on July 28 to redeem $4 million of the note on August 10.

The July 22 amendment to the note purchase agreement, negotiated to accommodate the wind down, tightened two things that reach holders directly:

• share repurchases are barred until the note is repaid and terminated, suspending the quarterly tender program that has been the only exit since 2018 — the board ran 1% offers in each of the first two quarters and paid $98,298 on the second-quarter offer after June 30;
• monthly distributions are capped at $0.01 per share until the note is gone, and on July 29 the board declared exactly that, payable October 15.

OFS Advisor cut its base management fee to 0.75% from 1.25% effective July 1 and waived income incentive and capital gains fees through liquidation with no recoupment right. Termination of the offering also released the fund from $364,690 of conditionally reimbursable organization and offering costs and contractual issuer expenses the adviser had carried.

What the wind down does to the risk profile

Concentration was already heavy and will get heavier. The ten largest positions represent 60.4% of the portfolio and 149.8% of net assets, and CLO equity managed by a single adviser accounts for 11.3% of investments and 27.9% of net assets. As holdings are monetized the survivors become a larger share of what is left, so any single credit moves NAV further than it used to.

Several structural risks sit behind the $3.50 to $4.30 estimate:

• asset coverage requirements may limit interim liquidating distributions until the note is retired;
• 1940 Act affiliate restrictions narrow the buyer pool by excluding OFS-managed accounts;
• RIC qualification becomes harder to hold as the portfolio shrinks and diversification tests bind;
• losing investment company regulation would forfeit the ASC 205-30 scope exception and force liquidation-basis accounting, which the company acknowledges could produce write-downs well below current carrying values;
• the board may move residual assets into a liquidating trust, converting shares into non-transferable interests with no quarterly reporting.

For allocators the sequencing is what matters. The November maturity comes before any meaningful liquidating distribution, the estimate rests on assumptions frozen at June 30, and the company has not committed to a disposition timetable in its quarterly reporting. Management is explicit that historical results say little about what follows, since income will fall as assets are sold while debt service and the compliance stack persist.