About a month ago, BlackRock valued its private debt to the troubled home improvement company Renovo Home Partners at 100 cents on the dollar. As of last week, however, the firm’s latest assessment was zero.
The sharp downgrade comes as Dallas-based Renovo — formed in 2022 by private equity firm Audax Group through the consolidation of several regional kitchen and bathroom remodeling businesses — abruptly filed for bankruptcy last week, signaling its intention to close down.
People with knowledge of the matter, who spoke on condition of anonymity due to the private nature of the transactions, said that BlackRock holds the majority of Renovo’s approximately $150 million in private debt, while MidCap Financial, under Apollo Global Management Inc., and Oaktree Capital hold smaller portions.
Renovo’s struggles were no secret. In April, lenders agreed to take losses and convert part of their loans into equity as part of a restructuring plan aimed at helping the company regain its footing, according to people familiar with the matter. Regulatory filings show that in the third quarter, they also agreed to defer cash interest payments on the restructured debt, an arrangement known as payment-in-kind (PIK).
Nevertheless, as of the end of September, funds managed by BlackRock and MidCap Financial were still valuing Renovo’s new debt at par, typically indicating investors’ expectation of full repayment.
Just weeks later, the situation deteriorated sharply.
“At the beginning of the fourth quarter, due to the company's own performance and liquidity issues, Renovo's board decided that the best viable path forward was to enter liquidation,” said Philip Tseng, CEO of BlackRock TCP Capital Corp., during an earnings call. “We expect to fully write down this position in the fourth quarter of 2025.”
Ted McNulty, a managing director at Apollo, stated during an earnings call for the MidCap Financial Investment Corp. fund that the company “became aware” at the end of October that Renovo would file for bankruptcy.
Spokespersons for both BlackRock and Apollo declined to comment further. Representatives of Oaktree Capital also declined to comment.
Although Renovo’s debt represents only a small fraction of the total assets managed by the three lenders, the sudden collapse of the company strikes at what critics describe as a core vulnerability in the private credit market: the disconnect between the valuation of illiquid loans and the operational health of the underlying businesses.
HomeRenew Buyer Inc., the primary borrowing entity of Renovo, filed for Chapter 7 bankruptcy protection last week, reporting liabilities in the range of $100 million to $500 million and assets of less than $50,000.
"We believe this outcome reflects issues specific to the issuer rather than broader industry weakness," Tseng said during BlackRock TCP Capital's earnings call while discussing Renovo.
