BlackRock Ensnared by Loans Tied to Firms Accused of Fraud (1)

BlackRock Inc. and other creditors are grappling with the fallout from loans made to two telecom firms that the companies are now accusing of fraud.

Lenders are suing Broadband Telecom and Bridgevoice, accusing the firms of fabricating accounts receivable in a fraud that the collateral agent’s lawyers call “breathtaking” in scope, according to a filing in a New York state court. BNP Paribas SA helped BlackRock’s private-credit arm, HPS, make the loans, the Wall Street Journal earlier reported, citing sources familiar with the matter.

Broadband Telecom filed for bankruptcy in August, according to bankruptcy court in the Eastern District of ...