Steele Creek Capital Asks Holders to Approve Liquidation and Exit From BDC Regime

Kenneth Moelis alone holds nearly 46% of the shares entitled to vote, and the company expects to pay out its final liquidating distribution by year-end.

September 23, 2026

Steele Creek Capital Corporation is asking stockholders to approve a full liquidation and dissolution of the business development company, the final step in a wind-down that began in August when the fund sold roughly three-quarters of its loan portfolio in a single dealer auction.

The Charlotte-based BDC has called a virtual special meeting for October 13, 2026, at which holders of record as of September 28 will vote on two linked proposals. The first would approve the liquidation and the distribution of sale proceeds to stockholders under a plan of liquidation the board adopted by written consent on September 21. The second, which takes effect only if the first passes, would authorize the board to withdraw the company’s election to be regulated as a BDC under the Investment Company Act of 1940. The board, including each independent director, voted unanimously to recommend both.

If approved, the plan takes effect December 1, 2026. From that date, Steele Creek will close to new and existing stockholders, cease operating as an investment company, convert its remaining assets to cash, settle its liabilities and distribute what is left to stockholders in redemption of their shares. The company expects the final liquidating distribution to occur by year-end, with an outer limit of two years after the effective date, though timing depends on the sale and settlement of its remaining investments.

The vote follows the August steps covered in Steele Creek Capital Sheds Three-Quarters of Portfolio, Weighs Full Liquidation. On August 17, the board unanimously approved a deleveraging plan, and the next day the adviser sold 164 broadly syndicated loans, or 75.8% of the portfolio at fair value as of June 30, through a bids-wanted-in-competition auction run with more than 22 dealers. The sales are expected to bring in gross proceeds of approximately $73 million. The company realized a net loss of $1.7 million on the disposals, while execution prices came in roughly $462,000 above the loans’ June 30 valuations.

Why the board chose to liquidate

The board framed the decision largely as a matter of scale. It pointed to the fund’s sub-scale size, the difficulty of raising equity in the current environment, an expectation that assets will keep shrinking for the foreseeable future, and the inefficiencies and higher costs of running a small investment company. It also cited the expense of maintaining BDC status and Exchange Act reporting, the company’s performance, and geopolitical and market conditions.

A central argument is price realization. The board said a liquidation could allow stockholders to realize net asset value for their shares and avoid the discount to NAV they would currently take by selling to a third party.

The board also disclosed that it had, over the years, weighed alternatives to liquidation, including converting the company into a non-traded, publicly offered BDC or a registered closed-end interval fund. It concluded that each option was likely to add costs, risks and complications compared with an orderly wind-down, making both less beneficial to stockholders.

The company will bear the costs of the liquidation, including legal, printing and proxy solicitation expenses, which it estimates at approximately $200,000.

Leaving the BDC framework

The second proposal would remove Steele Creek from the 1940 Act’s BDC regime. The withdrawal becomes effective once the SEC receives the company’s Form N-54C, and the board retains discretion over when to file it, based on factors including the timing of the liquidation and when the company meets the regulatory requirements to withdraw.

The board said dropping BDC status would significantly lower regulatory and compliance costs as a share of assets, which it described as potentially meaningful for returns given the company’s small size and a stockholder base of 190 beneficial owners as of the record date. It also approved terminating the company’s registration under Section 12(g) of the Exchange Act, which the company said its small holder base permits, and ending its dividend reinvestment plan. Once deregistered, Steele Creek would no longer file 10-Ks, 10-Qs, 8-Ks or proxy statements, though the board would remain subject to fiduciary duties under Maryland law until the liquidation is complete.

Protections that would fall away include:

• the 150% asset coverage requirement on senior securities;
• the prohibition on indemnifying directors and officers for willful malfeasance, bad faith, gross negligence or reckless disregard of duty;
• the requirement to maintain a fidelity bond against larceny and embezzlement;
• the requirement that a majority of directors be independent;
• restrictions on affiliated transactions and on issuing shares below NAV; and
• limits on share-based compensation and profit-sharing for insiders.

Withdrawal carries a tax consequence as well. Steele Creek has historically been taxed as a regulated investment company, and giving up BDC status would make it ineligible to remain one, which is why the withdrawal must be completed in connection with a full liquidation. The company intends to keep its RIC qualification for its final fiscal period and may declare one or more dividends, before or alongside the liquidating distributions, to pay out remaining taxable income and gains. For stockholders, the liquidating distribution will generally be treated as a sale of their shares, with gain or loss measured against their adjusted tax basis.

The vote and who controls it

The liquidation proposal requires the affirmative vote of holders of a majority of the votes entitled to be cast. The BDC withdrawal requires a majority of outstanding voting securities as defined under the 1940 Act. Abstentions count as votes against both proposals, brokers may not vote uninstructed shares, and stockholders have no appraisal or dissenters’ rights.

Ownership is concentrated. Of the 5,782,032 shares the company reported as outstanding and entitled to vote as of the record date, Kenneth Moelis beneficially owns 2,653,530, or 45.89%. All directors and executive officers as a group, eight persons in the ownership table, which also lists Moelis, hold 47.80%. Steele Creek is externally managed by Steele Creek Investment Management LLC, an indirect subsidiary of Moelis Asset Management.

Risks and fallback

The board cannot yet estimate net proceeds to stockholders or predict how long the liquidation will take. It also warned that the liquidity of the shares could decline, and that any pending claims against the company or the board must be resolved before assets are distributed. The board may amend the plan without stockholder approval where it deems that advisable, with notice to holders of any change that would materially and adversely affect them, and it may abandon the plan before articles of dissolution are filed.

If stockholders reject the liquidation, the withdrawal will not occur, and Steele Creek will continue operating as a BDC under its current investment objective while the board considers next steps, which could include putting the same or another liquidation plan back before stockholders.

The company has operated as a BDC since October 7, 2020. Chief Executive Officer Glenn Duffy signed the letter to stockholders.