EX-99.1 8 cgbd_20201231xxex991mmcffs.htm EX-99.1 Document

Exhibit 99.1






Middle Market Credit Fund, LLC

Consolidated Financial Statements with Report of Independent Auditors

For the years ended December 31, 2020 and 2019

1


Middle Market Credit Fund, LLC

Index to Consolidated Financial Statements
Report of Independent Auditors
Consolidated Statements of Assets, Liabilities and Members’ Equity as of December 31, 2020 and 2019
Consolidated Schedules of Investments as of December 31, 2020 and 2019
Consolidated Statements of Operations for the years ended December 31, 2020 and 201912 
Consolidated Statements of Changes in Members’ Equity for the years ended December 31, 2020 and 201913 
Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 201915 
Notes to Consolidated Financial Statements16 


2


Report of Independent Auditors

The Board of Managers and Members of
Middle Market Credit Fund, LLC

We have audited the accompanying consolidated financial statements of Middle Market Credit Fund, LLC (the “Company”), which comprise the consolidated statements of assets, liabilities and members’ capital, including the consolidated schedules of investments, as of December 31, 2020 and 2019, and the related consolidated statements of operations, changes in members’ capital and cash flows for the years ended December 31, 2020 and 2019, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in conformity with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Middle Market Credit Fund, LLC at December 31, 2020 and 2019, and the consolidated results of its operations, changes in its members’ capital and its cash flows for years ended December 31, 2020 and 2019 in conformity with U.S. generally accepted accounting principles.



/s/ Ernst & Young LLP

February 23, 2021
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MIDDLE MARKET CREDIT FUND, LLC
CONSOLIDATED STATEMENTS OF ASSETS, LIABILITIES AND MEMBERS’ EQUITY
(dollar amounts in thousands)
 December 31, 2020December 31, 2019
ASSETS
Cash and cash equivalents$119,796 $64,787 
Investments, at fair value (amortized cost of $1,080,538 and $1,258,157, respectively)1,056,381 1,246,839 
Deferred financing asset3,139 4,088 
Interest receivable4,120 4,609 
Receivable for investments sold/repaid201 — 
Prepaid expenses and other assets93 672 
Total assets$1,183,730 $1,320,995 
LIABILITIES AND MEMBERS’ EQUITY
Secured borrowings (Note 5)$514,261 $441,077 
Mezzanine Loans (Note 5)— 93,000 
2017-1 Notes payable, net of unamortized debt issuance costs of $ and $1,644, respectively (Note 6)— 208,222 
2019-2 Notes payable, net of unamortized debt issuance costs of $1,559 and $1,797, respectively (Note 6)253,933 320,185 
Subordinated Loans (Note 7)432,000 247,000 
Payable for investments purchased— 11,765 
Due to affiliate— — 
Interest and credit facility fees payable (Note 5)5,010 12,384 
Dividend payable10,000 8,000 
Other accrued expenses and liabilities533 234 
        Total liabilities$1,215,737 $1,341,867 
        Commitments and contingencies (Note 8)
MEMBERS' EQUITY/(DEFICIT)
Members' equity$$
Accumulated net investment income (loss) net of cumulative dividends of $122,159 and $82,659, respectively433 (1,271)
Accumulated net realized gain (loss) net of cumulative dividends of $91 and $91, respectively(8,285)(8,285)
Accumulated net unrealized appreciation (depreciation)(24,157)(11,318)
Total members' equity (deficit), net$(32,007)$(20,872)
Total liabilities and members’ equity (deficit)$1,183,730 $1,320,995 
 

The accompanying notes are an integral part of these consolidated financial statements.
4


MIDDLE MARKET CREDIT FUND, LLC
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2020
(dollar amounts in thousands)
Consolidated Schedule of Investments as of December 31, 2020
Investments (1)
Footnotes
Industry
Reference Rate & Spread (2)
Interest 
Rate (2)
Maturity Date
Par/ Principal Amount
Amortized Cost (4)
Fair Value (5)
First Lien Debt (97.47% of fair value)
Acrisure, LLC\#(2)(3)Banking, Finance, Insurance & Real EstateL + 3.50%3.65%2/15/2027$25,634 $25,606 $25,104 
Alku, LLC+#(2)(3)Business ServicesL + 5.50%5.75%7/29/202623,666 23,466 23,512 
Alpha Packaging Holdings, Inc.+\(2)(3)Containers, Packaging & GlassL + 6.00%7.00%11/12/202116,378 16,378 16,378 
AmeriLife Holdings LLC#(2)(3)Banking, Finance, Insurance & Real EstateL + 4.00%4.15%3/18/20279,951 9,929 9,802 
Analogic Corporation^+(2)(3)(6)Capital EquipmentL + 5.25%6.25%6/22/202418,857 18,837 18,857 
Anchor Packaging, Inc.+#(2)(3)Containers, Packaging & GlassL + 4.00%4.15%7/18/202624,723 24,617 24,656 
API Technologies Corp.+\(2)(3)Aerospace & DefenseL + 4.25%4.49%5/9/202614,775 14,713 13,999 
Aptean, Inc.+\(2)(3)SoftwareL + 4.25%4.40%4/23/202612,281 12,227 12,077 
AQA Acquisition Holding, Inc.+\(2)(3)(6)High Tech IndustriesL + 4.25%5.25%5/24/202318,759 18,752 18,757 
Astra Acquisition Corp.+#(2)(3)SoftwareL + 5.50%6.50%3/1/202728,783 28,392 28,783 
Avalign Technologies, Inc.+\(2)(3)Healthcare & PharmaceuticalsL + 4.50%4.73%12/22/202514,592 14,481 14,334 
Big Ass Fans, LLC+\#(2)(3)Capital EquipmentL + 3.75%4.75%5/21/202413,766 13,714 13,766 
BK Medical Holding Company, Inc.^+(2)(3)(6)Healthcare & PharmaceuticalsL + 5.25%6.25%6/22/202424,165 23,951 22,363 
Chemical Computing Group ULC (Canada)^+(2)(3)(6)SoftwareL + 5.00%6.00%8/30/202314,055 13,378 14,055 
Clarity Telecom LLC.+(2)(3)Media: Broadcasting & SubscriptionL + 4.25%4.40%8/30/202614,813 14,773 14,813 
Clearent Newco, LLC^(2)(3)(6)High Tech IndustriesL + 6.50%7.50%3/20/20254,079 4,079 3,907 
Clearent Newco, LLC^+\(2)(3)High Tech IndustriesL + 5.50%6.50%3/20/202529,486 29,236 28,722 
DecoPac, Inc.^+\(2)(3)(6)Non-durable Consumer GoodsL + 4.25%5.25%9/29/202412,336 12,253 12,318 
Diligent Corporation^+(2)(3)(6)TelecommunicationsL + 6.25%7.25%8/4/20258,683 8,411 8,819 
DTI Holdco, Inc.^+\(2)(3)High Tech IndustriesL + 4.75%5.75%9/30/202318,690 18,642 16,655 
Eliassen Group, LLC+\(2)(3)Business ServicesL + 4.25%4.40%11/5/20247,543 7,516 7,483 
EvolveIP, LLC^+(2)(3)(6)TelecommunicationsL + 5.75%6.75%6/7/202319,800 19,759 19,775 
Exactech, Inc.+\#(2)(3)Healthcare & PharmaceuticalsL + 3.75%4.75%2/14/202521,528 21,416 20,422 
Excel Fitness Holdings, Inc.+#(2)(3)Hotel, Gaming & LeisureL + 5.25%6.25%10/7/202524,750 24,546 22,780 
Frontline Technologies Holdings, LLC+(2)(3)SoftwareL + 5.75%6.75%9/18/202314,886 14,198 14,589 
Golden West Packaging Group LLC+\(2)(3)Containers, Packaging & GlassL + 5.25%6.25%6/20/202329,012 28,896 28,974 
HMT Holding Inc.+\(2)(3)(6)Energy: Oil & GasL + 5.00%6.00%11/17/202332,821 32,458 30,984 
Integrity Marketing Acquisition, LLC^+(2)(3)(6)Banking, Finance, Insurance & Real EstateL + 6.25%7.25%8/27/20257,836 7,701 7,956 
Jensen Hughes, Inc.+\(2)(3)(6)Utilities: ElectricL + 4.50%5.50%3/22/202434,584 34,489 33,424 
5


Consolidated Schedule of Investments as of December 31, 2020
Investments (1)
Footnotes
Industry
Reference Rate & Spread (2)
Interest 
Rate (2)
Maturity Date
Par/ Principal Amount
Amortized Cost (4)
Fair Value (5)
KAMC Holdings, Inc.+#(2)(3)Energy: ElectricityL + 4.00%4.23%8/14/202613,825 13,768 12,531 
KBP Investments, LLC^+(2)(3)(6)Beverage, Food & TobaccoL + 5.00%6.00%5/15/2023$9,292 $9,059 $9,350 
Marco Technologies, LLC^+\(2)(3)(6)Media: Advertising, Printing & PublishingL + 4.00%5.00%10/30/20237,332 7,293 7,332 
Mold-Rite Plastics, LLC+\(2)(3)Chemicals, Plastics & RubberL + 4.25%5.25%12/14/202114,520 14,501 14,520 
Newport Group Holdings II, Inc.+\#(2)(3)Banking, Finance, Insurance & Real EstateL + 3.50%3.75%9/13/202523,475 23,285 23,405 
Odyssey Logistics & Technology Corp.+\#(2)(3)Transportation: CargoL + 4.00%5.00%10/12/202438,897 38,773 37,766 
Output Services Group^+\(2)(3)Media: Advertising, Printing & PublishingL + 4.50%5.50%3/27/202419,421 19,382 14,178 
Pasternack Enterprises, Inc.+\(2)(3)Capital EquipmentL + 4.00%5.00%7/2/202522,524 22,513 22,218 
Pharmalogic Holdings Corp.+\(2)(3)Healthcare & PharmaceuticalsL + 4.00%5.00%6/11/202311,205 11,189 11,158 
Premise Health Holding Corp.+\#(2)(3)Healthcare & PharmaceuticalsL + 3.50%3.75%7/10/202513,584 13,538 13,503 
Propel Insurance Agency, LLC^+\(2)(3)(6)Banking, Finance, Insurance & Real EstateL + 5.00%6.00%6/1/202438,134 37,662 37,716 
Q Holding Company+\#(2)(3)AutomotiveL + 5.00%6.00%12/31/202321,735 21,604 20,229 
QW Holding Corporation+(2)(3)(6)Environmental IndustriesL + 6.25%7.25%8/31/202211,566 11,465 10,727 
Radiology Partners, Inc.+\#(2)(3)Healthcare & PharmaceuticalsL + 4.25%4.81%7/9/202527,686 27,581 27,193 
RevSpring Inc.+\#(2)(3)Media: Advertising, Printing & PublishingL + 4.25%4.40%10/11/202529,449 29,265 29,199 
Situs Group Holdings Corporation+\(2)(3)Banking, Finance, Insurance & Real EstateL + 4.75%5.75%6/28/202514,781 14,689 14,636 
T2 Systems, Inc.^+(2)(3)(6)Transportation: ConsumerL + 6.75%7.75%9/28/202229,119 28,743 29,118 
The Original Cakerie, Ltd. (Canada)+\(2)(3)(6)Beverage, Food & TobaccoL + 4.50%5.50%7/20/20226,295 6,281 6,289 
The Original Cakerie, Ltd. (Canada)+(2)(3)Beverage, Food & TobaccoL + 5.00%6.00%7/20/20228,837 8,815 8,829 
Thoughtworks, Inc.\#(2)(3)Business ServicesL + 3.75%4.75%10/11/202411,704 11,683 11,704 
U.S. Acute Care Solutions, LLC+\(2)(3)Healthcare & PharmaceuticalsL + 6.00%7.00%5/15/202131,211 31,184 29,104 
U.S. TelePacific Holdings Corp.+\(2)(3)TelecommunicationsL + 5.50%6.50%5/2/202326,660 26,585 23,984 
VRC Companies, LLC+(2)(3)(6)Business ServicesL + 6.50%7.50%3/31/202330,582 29,464 30,582 
Water Holdings Acquisition LLC^+(2)(3)(6)Utilities: Water L + 5.25%6.25%12/18/202626,316 25,520 25,516 
Welocalize, Inc.+(2)(3)(6)Business ServicesL + 4.50%5.50%12/23/202322,629 22,414 22,584 
WRE Holding Corp.^+(2)(3)(6)Environmental IndustriesL + 5.25%6.25%1/3/20238,367 8,336 8,252 
First Lien Debt Total
$1,051,406 $1,029,687 
Second Lien Debt (2.28% of fair value)
DBI Holding, LLC^(2)Transportation: Cargo9.00% PIK9%2/1/2026$24,113 $23,768 $24,113 
Second Lien Debt Total
$23,768 $24,113 
Equity Investments (0.24% of fair value)
DBI Holding, LLC^Transportation: Cargo2,961 $— $— 
DBI Holding, LLC^Transportation: Cargo13,996 5,364 2,581 
Equity Investments Total
$5,364 $2,581 
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Consolidated Schedule of Investments as of December 31, 2020
Investments (1)
Footnotes
Industry
Reference Rate & Spread (2)
Interest 
Rate (2)
Maturity Date
Par/ Principal Amount
Amortized Cost (4)
Fair Value (5)
Total Investments
$1,080,538 $1,056,381 
^ Denotes that all or a portion of the assets are owned by Credit Fund. Credit Fund has entered into a revolving credit facility (the "Credit Fund Facility"). Accordingly, such assets are not available to creditors of Credit Fund Sub, the 2019-2 Issuer or Credit Fund Warehouse II.
+ Denotes that all or a portion of the assets are owned by Credit Fund Sub. Credit Fund Sub has entered into a revolving credit facility (the “Credit Fund Sub Facility”). The lenders of the Credit Fund Sub Facility have a first lien security interest in substantially all of the assets of Credit Fund Sub. Accordingly, such assets are not available to creditors of Credit Fund, the 2019-2 Issuer or Credit Fund Warehouse II.
\ Denotes that all or a portion of the assets are owned by the 2019-2 Issuer and secure the notes issued in connection with a $399,900 term debt securitization completed by Credit Fund on May 21, 2019 (the “2019-2 Debt Securitization”). Accordingly, such assets are not available to creditors of Credit Fund, Credit Fund Sub, or Credit Fund Warehouse II.
# Denotes that all or a portion of the assets are owned by the Credit Fund Warehouse II. Credit Fund Warehouse II has entered into a revolving credit facility (the "Credit Fund Warehouse II"). The lenders of the Credit Fund Warehouse II Facility have a first lien security interest in substantially all of the assets of the Credit Fund Warehouse II. Accordingly, such assets are not available to creditors of Credit Fund, Credit Fund Sub, or 2019-2 Issuer.
(1)    Unless otherwise indicated, issuers of investments held by Credit Fund are domiciled in the United States. As of December 31, 2020, the geographical composition of investments as a percentage of fair value was 2.76% in Canada and 97.24% in the United States. Certain portfolio company investments are subject to contractual restrictions on sales.
(2)Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either LIBOR or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, Credit Fund has indicated the reference rate used and provided the spread and the interest rate in effect as of December 31, 2020. As of December 31, 2020, the reference rates for Credit Fund's variable rate loans were the 30-day LIBOR at 0.15%, the 90-day LIBOR at 0.25% and the 180-day LIBOR at 0.26%.
(3)Loan includes interest rate floor feature, which is generally 1.00%.
(4)Amortized cost represents original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion/amortization of discounts/premiums, as applicable, on debt investments using the effective interest method.
(5)Fair value is determined in good faith by or under the direction of the board of managers of Credit Fund, pursuant to Credit Fund’s valuation policy, with the fair value of all investments determined using significant unobservable inputs, which is substantially similar to the valuation policy of the Company provided in Note 3, Fair Value Measurements.
7


(6)As of December 31, 2020, Credit Fund and Credit Fund Sub had the following unfunded commitments to fund delayed draw and revolving senior secured loans:
First Lien Debt – unfunded delayed draw and revolving term loans commitmentsTypeUnused FeePar/ Principal AmountFair Value
Analogic CorporationRevolver0.50 %$1,975 $— 
AQA Acquisition Holding, Inc.Revolver0.502,459 — 
BK Medical Holding Company, Inc.Revolver0.502,609 (176)
Chemical Computing Group ULC (Canada)Revolver0.50873 — 
Clearent Newco, LLCDelayed Draw1.002,549 (66)
DecoPac, Inc.Revolver0.502,143 (3)
Diligent CorporationDelayed Draw1.002,109 25 
Diligent CorporationRevolver0.50703 
EvolveIP, LLCDelayed Draw1.001,904 (2)
EvolveIP, LLCRevolver0.501,680 (2)
HMT Holding Inc.Revolver0.506,173 (291)
Integrity Marketing Acquistion, LLCDelayed Draw1.004,144 41 
Jensen Hughes, Inc.Delayed Draw1.001,127 (35)
Jensen Hughes, Inc.Revolver0.501,364 (43)
KBP Investments, LLCDelayed Draw1.00503 
KBP Investments, LLCDelayed Draw1.0010,190 30 
Marco Technologies, LLCDelayed Draw1.007,500 — 
Propel Insurance Agency, LLCRevolver0.501,905 (19)
Propel Insurance Agency, LLCDelayed Draw1.001,733 (17)
QW Holding CorporationRevolver0.505,498 (268)
QW Holding CorporationDelayed Draw1.00161 (8)
T2 Systems, Inc.Revolver0.501,955 — 
The Original Cakerie, Ltd. (Canada)Revolver0.501,665 (1)
VRC Companies, LLCRevolver0.50858 — 
Water Holdings Acquisition LLCDelayed Draw1.008,421 (168)
Water Holdings Acquisition LLCRevolver0.505,263 (105)
Welocalize, Inc.Revolver0.502,250 (4)
WRE Holding Corp.Revolver0.50852 (10)
WRE Holding Corp.Delayed Draw1.00563 (7)
Total unfunded commitments$81,129 $(1,120)

MIDDLE MARKET CREDIT FUND, LLC
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2019
(dollar amounts in thousands)

Consolidated Schedule of Investments as of December 31, 2019
Investments (1)
Footnotes
Industry
Reference Rate & Spread (2)
Interest 
Rate (2)
Maturity Date
Par/ Principal Amount
Amortized Cost (4)
Fair Value (5)
First Lien Debt (98.11% of fair value)
Achilles Acquisition, LLC\+#(2) (3) Banking, Finance, Insurance & Real EstateL + 4.00%5.75%10/13/2025$17,865 $17,776 $17,763 
Acrisure, LLC+\(2) (3) Banking, Finance, Insurance & Real EstateL + 3.75%5.85%11/22/202311,820 11,810 11,805 
Acrisure, LLC+\#(2) (3) Banking, Finance, Insurance & Real EstateL + 4.25%6.35%11/22/202320,674 20,639 20,674 
Advanced Instruments, LLC^+\*(2) (3) (7)Healthcare & PharmaceuticalsL + 5.25%6.99%10/31/202235,610 35,536 35,466 
Alku, LLC+#(2) (3) Business ServicesL + 5.50%7.44%7/29/202625,000 24,754 24,624 
Alpha Packaging Holdings, Inc.+*\(2) (3) Containers, Packaging & GlassL + 4.25%6.35%5/12/202016,684 16,676 16,601 
AmeriLife Group, LLC^#(2) (3) (7)Banking, Finance, Insurance & Real EstateL + 4.50%6.20%6/5/202616,627 16,557 16,558 
Anchor Packaging, Inc.^#(2) (3) (7)Containers, Packaging & GlassL + 4.00%5.70%7/18/202620,462 20,363 20,457 
8


Consolidated Schedule of Investments as of December 31, 2019
Investments (1)
Footnotes
Industry
Reference Rate & Spread (2)
Interest 
Rate (2)
Maturity Date
Par/ Principal Amount
Amortized Cost (4)
Fair Value (5)
API Technologies Corp.\+(2) (3) Aerospace & DefenseL + 4.25%5.95%5/9/202614,925 14,853 14,807 
Aptean, Inc.+\(2) (3) SoftwareL + 4.25%6.34%4/23/202612,406 12,344 12,385 
AQA Acquisition Holding, Inc.^*\(2) (3) (7)High Tech IndustriesL + 4.25%6.16%5/24/202318,954 18,922 18,860 
Avalign Technologies, Inc.+\(2) (3) Healthcare & PharmaceuticalsL + 4.50%6.70%12/22/202514,741 14,610 14,626 
Big Ass Fans, LLC+*\(2) (3) Capital EquipmentL + 3.75%5.85%5/21/202413,909 13,841 13,903 
Borchers, Inc.+*\(2) (3) (7)Chemicals, Plastics & RubberL + 4.50%6.60%11/1/202415,116 15,072 15,085 
Brooks Equipment Company, LLC*(2) (3) Construction & BuildingL + 5.00%6.91%8/29/20205,144 5,141 5,141 
Clarity Telecom LLC.+(2) (3) Media: Broadcasting & SubscriptionL + 4.50%6.20%8/30/202614,963 14,915 14,902 
Clearent Newco, LLC^+\(2) (3) (7)High Tech IndustriesL + 5.50%7.44%3/20/202529,738 29,436 29,134 
Datto, Inc.+\(2) (3) High Tech IndustriesL + 4.25%5.95%4/2/202612,438 12,375 12,420 
DecoPac, Inc.+*\(2) (3) (7)Non-durable Consumer GoodsL + 4.25%6.01%9/29/202412,336 12,233 12,292 
Dent Wizard International Corporation+\(2) (3) AutomotiveL + 4.00%5.70%4/7/202036,880 36,843 36,717 
DTI Holdco, Inc.+*\(2) (3) High Tech IndustriesL + 4.75%6.68%9/30/202318,885 18,771 17,611 
Eliassen Group, LLC+\(2) (3) Business ServicesL + 4.50%6.20%11/5/20247,581 7,548 7,579 
EIP Merger Sub, LLC (Evolve IP)+^(2) (3) (7)TelecommunicationsL + 5.75%7.45%6/7/202319,661 19,605 19,661 
Exactech, Inc.+\#(2) (3) Healthcare & PharmaceuticalsL + 3.75%5.45%2/14/202521,772 21,634 21,751 
Excel Fitness Holdings, Inc.+#(2) (3) Hotel, Gaming & LeisureL + 5.25%6.95%10/7/202525,000 24,758 24,875 
Golden West Packaging Group LLC+*\(2) (3) Containers, Packaging & GlassL + 5.75%7.45%6/20/202329,464 29,303 29,072 
HMT Holding Inc.^+*\(2) (3) (7)Energy: Oil & GasL + 5.00%6.74%11/17/202333,157 32,678 32,972 
Jensen Hughes, Inc.\+^*(2) (3) (7)Utilities: ElectricL + 4.50%6.24%3/22/202433,909 33,757 33,550 
KAMC Holdings, Inc.+#(2) (3) Energy: ElectricityL + 4.00%5.91%8/14/202613,965 13,899 13,881 
MAG DS Corp.^+\(2) (3) (7)Aerospace & DefenseL + 4.75%6.46%6/6/202528,471 28,242 28,286 
Maravai Intermediate Holdings, LLC+\#(2) (3) Healthcare & PharmaceuticalsL + 4.25%6.00%8/2/2025$29,625 $29,378 $29,400 
Marco Technologies, LLC^+\(2) (3) (7) Media: Advertising, Printing & PublishingL + 4.25%6.16%10/30/20237,463 7,410 7,463 
Mold-Rite Plastics, LLC+\(2) (3) Chemicals, Plastics & RubberL + 4.25%5.95%12/14/202114,557 14,519 14,524 
MSHC, Inc.^+*\(2) (3) (7)Construction & BuildingL + 4.25%5.95%12/31/202438,251 38,138 38,166 
Newport Group Holdings II, Inc.\+#(2) (3) Banking, Finance, Insurance & Real EstateL + 3.75%5.65%9/13/202523,715 23,487 23,663 
Odyssey Logistics & Technology Corp.+*\#(2) (3) Transportation: CargoL + 4.00%5.70%10/12/202439,013 38,859 38,763 
Output Services Group^+\(2) (3) (7)Media: Advertising, Printing & PublishingL + 4.50%6.20%3/27/202419,621 19,570 19,469 
PAI Holdco, Inc.+*\(2) (3) AutomotiveL + 4.25%6.35%1/5/202519,532 19,458 19,532 
Park Place Technologies, Inc.+\#(2) (3) High Tech IndustriesL + 4.00%5.70%3/28/202522,566 22,489 22,566 
Pasternack Enterprises, Inc.+\(2) (3) Capital EquipmentL + 4.00%5.70%7/2/202522,755 22,742 22,653 
9


Consolidated Schedule of Investments as of December 31, 2019
Investments (1)
Footnotes
Industry
Reference Rate & Spread (2)
Interest 
Rate (2)
Maturity Date
Par/ Principal Amount
Amortized Cost (4)
Fair Value (5)
Pathway Vet Alliance LLC+\(2) (3) (7)Consumer ServicesL + 4.50%6.21%12/20/202419,085 18,708 19,217 
Pharmalogic Holdings Corp.+\(2) (3) Healthcare & PharmaceuticalsL + 4.00%5.70%6/11/202311,320 11,296 11,302 
Premise Health Holding Corp.^+\#(2) (3) (7)Healthcare & PharmaceuticalsL + 3.50%5.60%7/10/202513,723 13,665 13,501 
Propel Insurance Agency, LLC^+\(2) (3) (7)Banking, Finance, Insurance & Real EstateL + 4.25%6.35%6/1/202422,532 22,056 22,395 
Q Holding Company+*\#(2) (3) AutomotiveL + 5.00%6.70%12/31/202321,955 21,777 21,922 
QW Holding Corporation (Quala)^+*(2) (3) (7)Environmental IndustriesL + 5.75%7.73%8/31/202211,630 11,449 11,531 
Radiology Partners, Inc.+\#(2) (3) Healthcare & PharmaceuticalsL + 4.75%6.66%7/9/202528,719 28,590 28,768 
RevSpring Inc.+*\#(2) (3) Media: Advertising, Printing & PublishingL + 4.00%5.95%10/11/202524,750 24,631 24,608 
Situs Group Holdings Corporation\+^(2) (3) (7)Banking, Finance, Insurance & Real EstateL + 4.75%6.45%6/28/202513,715 13,621 13,697 
Systems Maintenance Services Holding, Inc.+*(2) (3) High Tech IndustriesL + 5.00%6.70%10/30/202323,765 23,672 18,180 
Surgical Information Systems, LLC+*\(2) (3) (6) High Tech IndustriesL + 4.75%7.47%4/24/202326,168 26,005 25,715 
T2 Systems, Inc.^+*(2) (3) (7)Transportation: ConsumerL + 6.75%8.85%9/28/202218,045 17,789 18,045 
The Original Cakerie, Ltd. (Canada)+*(2) (3) (7) Beverage, Food & TobaccoL + 5.00%6.84%7/20/20228,928 8,897 8,887 
The Original Cakerie, Ltd. (Canada)^*(2) (3) (7)Beverage, Food & TobaccoL + 4.50%6.34%7/20/20226,826 6,801 6,790 
ThoughtWorks, Inc.+*\(2) (3) Business ServicesL + 4.00%5.70%10/11/202411,824 11,794 11,824 
U.S. Acute Care Solutions, LLC+\*(2) (3) Healthcare & PharmaceuticalsL + 5.00%6.91%5/15/202131,431 31,331 29,869 
U.S. TelePacific Holdings Corp.+*\(2) (3) TelecommunicationsL + 5.00%7.10%5/2/202326,660 26,499 25,430 
Valet Waste Holdings, Inc.+\(2) (3) Construction & BuildingL + 3.75%5.70%9/28/202511,850 11,825 11,688 
Welocalize, Inc.+^(2) (3) (7)Business ServicesL + 4.50%6.21%12/23/202323,038 22,788 22,787 
WIRB - Copernicus Group, Inc.+*\(2) (3) (7)Healthcare & PharmaceuticalsL + 4.25%5.95%8/15/202220,888 20,822 20,887 
WRE Holding Corp.^+*(2) (3) (7)Environmental IndustriesL + 5.00%6.91%1/3/2023$7,431 $7,372 $7,304 
Zywave, Inc.+*\(2) (3) (7)High Tech IndustriesL + 5.00%6.93%11/17/202219,228 19,107 19,211 
First Lien Debt Total
$1,231,436 $1,223,215 
Second Lien Debt (1.75% of fair value)
DBI Holding, LLC^*(2) (3) (8)Transportation: Cargo8.00% PIK8%2/1/2026$21,150 $20,697 $21,150 
Zywave, Inc.*(2) (3) High Tech IndustriesL + 9.00%10.94%11/17/2023666 660 664 
Second Lien Debt Total
$21,357 $21,814 
Equity Investments (0.15% of fair value)
DBI Holding, LLC^Transportation: Cargo16,957 $5,364 $1,810 
Equity Investments Total
5,364 1,810 
Total Investments
$1,258,157 $1,246,839 

^ Denotes that all or a portion of the assets are owned by Credit Fund. Credit Fund has entered into a revolving credit facility (the "Credit Fund Facility"). Accordingly, such assets are not available to creditors of Credit Fund Sub, the 2017-1 Issuer, the 2019-2 Issuer or Credit Fund Warehouse II.
+ Denotes that all or a portion of the assets are owned by Credit Fund Sub. Credit Fund Sub has entered into a revolving credit facility (the “Credit Fund Sub Facility”). The lenders of the Credit Fund Sub Facility have a first lien security interest in substantially all of the assets of Credit Fund Sub. Accordingly, such assets are not available to creditors of Credit Fund, the 2017-1 Issuer, the 2019-2 Issuer or Credit Fund Warehouse II.
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* Denotes that all or a portion of the assets are owned by the 2017-1 Issuer and secure the notes issued in connection with a $399,900 term debt securitization completed by Credit Fund on December 19, 2017 (the “2017-1 Debt Securitization”). Accordingly, such assets are not available to creditors of Credit Fund, Credit Fund Sub, the 2019-2 Issuer or Credit Fund Warehouse II.
\ Denotes that all or a portion of the assets are owned by the 2019-2 Issuer and secure the notes issued in connection with a $399,900 term debt securitization completed by Credit Fund on May 21, 2019 (the “2019-2 Debt Securitization”). Accordingly, such assets are not available to creditors of Credit Fund, Credit Fund Sub, the 2017-1 Issuer or Credit Fund Warehouse II.
# Denotes that all or a portion of the assets are owned by the Credit Fund Warehouse II. Credit Fund Warehouse II has entered into a revolving credit facility (the "Credit Fund Warehouse II"). The lenders of the Credit Fund Warehouse II Facility have a first lien security interest in substantially all of the assets of the Credit Fund Warehouse II. Accordingly, such assets are not available to creditors of Credit Fund, Credit Fund Sub, 2017-1 Issuer or 2019-2 Issuer.
(1)    Unless otherwise indicated, issuers of investments held by Credit Fund are domiciled in the United States. As of December 31, 2019, the geographical composition of investments as a percentage of fair value was 1.26% in Canada and 98.74% in the United States. Certain portfolio company investments are subject to contractual restrictions on sales.
(2)Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either LIBOR or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, Credit Fund has indicated the reference rate used and provided the spread and the interest rate in effect as of December 31, 2019. As of December 31, 2019, the reference rates for Credit Fund's variable rate loans were the 30-day LIBOR at 1.75%, the 90-day LIBOR at 1.91% and the 180-day LIBOR at 1.91%.
(3)Loan includes interest rate floor feature, which is generally 1.00%.
(4)Amortized cost represents original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion/amortization of discounts/premiums, as applicable, on debt investments using the effective interest method.
(5)Fair value is determined in good faith by or under the direction of the board of managers of Credit Fund, pursuant to Credit Fund’s valuation policy, with the fair value of all investments determined using significant unobservable inputs, which is substantially similar to the valuation policy of the Company provided in Note 3, Fair Value Measurements.
(6)In addition to the interest earned based on the stated interest rate of this loan, which is the amount reflected in this schedule, Credit Fund is entitled to receive additional interest as a result of an agreement among lenders as follows: Surgical Information Systems, LLC (0.89%). Pursuant to the agreement among lenders in respect of these loans, these investments represent a first lien/last out loan, which has a secondary priority behind the first lien/first out loan with respect to principal, interest and other payments.
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(7)As of December 31, 2019, Credit Fund and Credit Fund Sub had the following unfunded commitments to fund delayed draw and revolving senior secured loans:
First Lien Debt – unfunded delayed draw and revolving term loans commitmentsTypeUnused FeePar/ Principal AmountFair Value
Advanced Instruments, LLCRevolver0.50 %$563 $(2)
AmeriLife Group, LLCDelayed Draw1.00298 (1)
Anchor Packaging, Inc.Delayed Draw1.004,487 (1)
AQA Acquisition Holding, Inc.Revolver0.502,459 (11)
Borchers, Inc.Revolver0.501,935 (3)
Clearent Newco, LLCDelayed Draw1.006,636 (110)
DecoPac, Inc.Revolver0.502,143 (7)
EIP Merger Sub, LLC (Evolve IP)Revolver0.501,680 — 
EIP Merger Sub, LLC (Evolve IP)Delayed Draw1.002,240 — 
HMT Holding Inc.Revolver0.506,173 (29)
Jensen Hughes, Inc.Revolver0.501,136 (11)
Jensen Hughes, Inc.Delayed Draw1.002,365 (23)
MAG DS Corp.Revolver0.502,188 (13)
Marco Technologies, LLCDelayed Draw1.007,500 — 
MSHC, Inc.Delayed Draw1.001,913 (4)
Output Services GroupDelayed Draw4.25116 (1)
Pathway Vet Alliance LLCDelayed Draw1.0019,867 68 
Premise Health Holding Corp.Delayed Draw1.001,103 (17)
Propel Insurance Agency, LLCRevolver0.502,381 (10)
Propel Insurance Agency, LLCDelayed Draw0.507,143 (31)
QW Holding Corporation (Quala)Revolver0.505,498 (31)
QW Holding Corporation (Quala)Delayed Draw1.00217 (1)
Situs Group Holdings CorporationDelayed Draw1.001,216 (1)
T2 Systems, Inc.Revolver0.501,369 — 
The Original Cakerie, Ltd. (Canada)Revolver0.501,199 (5)
Welocalize, Inc.Revolver0.502,057 (21)
WIRB - Copernicus Group, Inc.Revolver0.501,000 — 
WIRB - Copernicus Group, Inc.Delayed Draw1.002,592 — 
WRE Holding Corp.Revolver0.50441 (6)
WRE Holding Corp.Delayed Draw1.001,981 (25)
Zywave, Inc.Revolver0.50998 (1)
Total unfunded commitments$92,894 $(297)
(8)Loan was on non-accrual status as of December 31, 2019.





The accompanying notes are an integral part of these consolidated financial statements.

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MIDDLE MARKET CREDIT FUND, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollar amounts in thousands)
 For the years ended December 31,
 20202019
Investment income: 
    Interest income$81,282 $91,942 
    Other income2,194 2,150 
Total investment income83,476 94,092 
  
Expenses: 
    Interest expense37,435 56,361 
    Credit facility fees2,803 2,867 
    Other general and administrative871 916 
    Professional fees1,050 848 
    Administrative service fees113 137 
    Organization expenses— 329 
Total expenses42,272 61,458 
Net investment income41,204 32,634 
Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments: 
    Net realized gain (loss) on investments— (8,285)
    Net change in unrealized appreciation (depreciation) on investments(12,839)13,711 
    Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments
(12,839)5,426 
Net increase in members’ equity resulting from operations$28,365 $38,060 

The accompanying notes are an integral part of these consolidated financial statements.

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MIDDLE MARKET CREDIT FUND, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ EQUITY
(dollar amounts in thousands)
 
 For the years ended December 31,
 20202019
Increase (decrease) in members’ equity resulting from operations: 
Net investment income (loss)$41,204 $32,634 
Net realized gain (loss) on investments— (8,285)
Net change in unrealized appreciation (depreciation) on investments(12,839)13,711 
Net increase (decrease) in members’ capital resulting from operations28,365 38,060 
  
Capital transactions: 
Dividends declared(39,500)(31,500)
Net increase (decrease) in members’ equity resulting from capital transactions(39,500)(31,500)
Net increase (decrease) in members’ equity(11,135)6,560 
Members’ equity (deficit) at beginning of year(20,872)(27,432)
Members’ deficit at end of year$(32,007)$(20,872)

The accompanying notes are an integral part of these consolidated financial statements.
    
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MIDDLE MARKET CREDIT FUND, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts in thousands)
For the years ended December 31,
20202019
Cash flows from operating activities:
Net increase (decrease) in members’ equity resulting from operations$28,365 $38,060 
Adjustments to reconcile net increase (decrease) in members’ equity resulting from operations to net cash provided by (used in) operating activities: 
Payment-in-kind interest(3,067)(66)
Amortization of deferred financing costs2,909 1,604 
Amortization of discount on notes824 137 
Net accretion of discount on investments(4,429)(5,135)
Net realized (gain) loss on investments— 8,285 
Net change in unrealized (appreciation) depreciation on investments12,839 (13,711)
Cost of investments purchased and change in payable for investments purchased(362,986)(480,015)
Proceeds from sales and repayments of investments536,083 416,187 
Changes in operating assets:
Interest receivable489 (2,877)
Prepaid expenses and other assets579 (642)
Changes in operating liabilities: 
Due to affiliate— (146)
Interest and credit facility fees payable(7,374)(444)
Other liabilities299 (650)
Net cash provided by (used in) operating activities204,531 (39,413)
Cash flows from financing activities: 
Proceeds from issuance of subordinated loans185,000 11,000 
Borrowings on Credit Fund Facility and Credit Fund Sub Facility332,813 350,070 
Borrowings on Credit Fund Warehouse— 34,544 
Borrowings on Credit Fund Warehouse II54,373 97,571 
Repayments on Credit Fund Facility and Credit Fund Sub Facility(348,460)(496,698)
Repayments on Credit Fund Warehouse— (135,589)
Repayments on Credit Fund Warehouse II(58,542)— 
Repayments on 2017-1 CLO notes(210,673)(101,196)
Proceeds from issuance of 2019-2 CLO notes— 351,580 
Repayments of 2019-2 CLO notes(66,533)(29,634)
Debt issuance costs paid— (2,245)
Dividends paid in cash(37,500)(30,900)
Net cash provided by (used in) financing activities(149,522)48,503 
Net increase (decrease) in cash and cash equivalents55,009 9,090 
Cash and cash equivalents, beginning of year64,787 55,698 
Cash and cash equivalents, end of year$119,796 $64,787 
Supplemental disclosures: 
Dividends declared during the year$39,500 $31,500 
Interest paid during the year$47,612 $54,941 
Taxes paid during the year$240 $554 
The accompanying notes are an integral part of these consolidated financial statements.
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MIDDLE MARKET CREDIT FUND, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2020
(dollar amounts in thousands)
1. ORGANIZATION
Middle Market Credit Fund, LLC (“Credit Fund”) is a Delaware limited liability company formed on February 4, 2016. On February 29, 2016, TCG BDC, Inc. (“TCG BDC”) and Credit Partners USA LLC (“Credit Partners” and, together with TCG BDC, the “Members” and, each, a “Member”) entered into an amended and restated limited liability company agreement, which was subsequently amended and restated on June 24, 2016 and February 22, 2021 (as amended, the “LLC Agreement”) to co-manage Credit Fund. Credit Fund is managed by a six-member board of managers (“Board of Managers”), on which TCG BDC and Credit Partners (each, a “Member, and collectively, the “Members”) each have equal representation. Investment decisions must be unanimously approved by a quorum of the investment committee, which is comprised of persons appointed equally by each Member (“Investment Committee”). The Members each have 50% economic ownership of Credit Fund and have commitments to fund, from time to time, capital and subordinated loans of up to $250,000 each. Credit Fund commenced substantial operations on May 11, 2016, the date of the first capital call.
Credit Fund’s investment objective is to generate current income and capital appreciation primarily through debt investments in U.S. middle market companies.
Middle Market Credit Fund SPV, LLC (the “Credit Fund Sub”), MMCF CLO 2017-1 LLC (the “2017-1 Issuer”), MMCF CLO 2019-2, LLC (the "2019-2 Issuer", formerly known as MMCF Warehouse, LLC (the "Credit Fund Warehouse")) and MMCF Warehouse II, LLC (the "Credit Fund Warehouse II), each a Delaware limited liability company, were formed on April 5, 2016, October 6, 2017, November 26, 2018 and August 16, 2019, respectively. Credit Fund Sub, the 2017-1 Issuer, the 2019-2 Issuer and the Credit Fund Warehouse II are wholly owned subsidiaries of Credit Fund and are consolidated in Credit Fund’s consolidated financial statements commencing from the date of their respective formations. Credit Fund Sub, the 2017-1 Issuer, the 2019-2 Issuer and Credit Fund Warehouse II primarily invest in first lien loans of middle market companies. Credit Fund and its wholly owned subsidiaries follow the same Internal Risk Rating System as the TCG BDC.
Carlyle Global Credit Administration L.L.C. (the “Administrator”) provides the administrative services necessary for Credit Fund to operate. The Administrator is a wholly owned subsidiary of Carlyle Investment Management L.L.C., a subsidiary of The Carlyle Group Inc. (formerly, The Carlyle Group, L.P.). “Carlyle” refers to The Carlyle Group Inc. and its consolidated subsidiaries, a global investment firm publicly traded on the Nasdaq Global Select Market under the symbol “CG”.
Credit Fund has a five-year investment period commencing on February 29, 2016, which was extended to May 21, 2022. Such period may be extended, suspended or sooner terminated pursuant to the terms of the LLC Agreement. After the end of the investment period, the LLC Agreement will continue to be in full force and effect and Credit Fund will not be dissolved until all the investments are amortized, liquidated or are otherwise transferred or disposed of by Credit Fund, the Credit Fund Sub, the 2017-1 Issuer, the 2019-2 Issuer, the Credit Warehouse II and, if applicable, any other subsidiary.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Credit Fund is an investment company for the purposes of accounting and financial reporting in accordance with Financial Accounting Standards Board Accounting Standards, Financial Services—Investment Companies (Topic 946). U.S. GAAP for an investment company requires investments to be recorded at their estimated fair value. The carrying value for all other assets and liabilities approximates their fair value.
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Principles of Consolidation
The consolidated financial statements include the accounts of Credit Fund and its wholly owned subsidiaries, the Credit Fund Sub, the 2017-1 Issuer, the 2019-2 Issuer and the Credit Fund Warehouse II. All significant intercompany balances and transactions have been eliminated.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make assumptions and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management’s estimates are based on historical experiences and other factors, including expectations of future events that management believes to be reasonable under the circumstances. It also requires management to exercise judgment in the process of applying Credit Fund’s accounting policies. Assumptions and estimates regarding the valuation of investments and their resulting impact on base management and incentive fees involve a higher degree of judgment and complexity and these assumptions and estimates may be significant to the consolidated financial statements. Actual results could differ from these estimates and such differences could be material.
Investments
Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment using the specific identification method without regard to unrealized appreciation or depreciation previously recognized, and includes investments charged off during the period, net of recoveries. Net change in unrealized appreciation or depreciation on investments as presented in the accompanying Consolidated Statements of Operations reflects the net change in the fair value of investments, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized. See Note 3 for further information about fair value measurements.
Cash and Cash Equivalents
Cash and cash equivalents consist of demand deposits and highly liquid investments (e.g., money market funds, U.S. treasury notes) with original maturities of three months or less. Cash equivalents are carried at amortized cost, which approximates fair value. Credit Fund’s cash and cash equivalents are held with two large financial institutions and cash held in such financial institutions may, at times, exceed the Federal Deposit Insurance Corporation insured limit. As of December 31, 2020 and 2019, there were no cash equivalents held.
Revenue Recognition
Interest from Investments and Realized Gain/Loss on Investments
Interest income is recorded on an accrual basis and includes the accretion of discounts and amortization of premiums. Discounts from and premiums to par value on debt investments purchased are accreted/amortized into interest income over the life of the respective security using the effective interest method. The amortized cost of debt investments represents the original cost, including origination fees, adjusted for the accretion of discounts and amortization of premiums, if any. At time of exit, the realized gain or loss on an investment is the difference between the amortized cost at time of exit and the cash received at exit using the specific identification method.
Credit Fund may have loans in its portfolio that contain payment-in-kind (“PIK”) provisions. PIK represents interest that is accrued and recorded as interest income at the contractual rates, increases the loan principal on the respective capitalization dates, and is generally due at maturity. As of December 31, 2020 and 2019, the fair value of the loans in the portfolio with PIK provisions was $24,113 and $21,150, respectively. For the years ended December 31, 2020 and 2019, Credit Fund earned $3,342 and $66 in PIK income, respectively, included in interest income in the accompanying Consolidated Statements of Operations.
Other Income
Other income may include income such as consent, waiver, amendment, unused, syndication and prepayment fees associated with Credit Fund’s investment activities as well as any fees for managerial assistance services rendered by Credit Fund to portfolio companies. Such fees are recognized as income when earned or the services are rendered. Credit Fund may receive fees for guaranteeing the outstanding debt of a portfolio company. Such fees will be amortized into other income over
17


the life of the guarantee. The unamortized amount, if any, is included in other assets in the accompanying Consolidated Statements of Assets, Liabilities and Members’ Capital. For the years ended December 31, 2020 and 2019, Credit Fund earned $2,194 and $2,150, respectively, in other income.
Non-Accrual Income
Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest are paid current and, in management’s judgment, are likely to remain current. Management may not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection. As of December 31, 2020 there were no loans on non-accrual status. As of December 31, 2019, the fair value of the loan in the portfolio on non-accrual status was $21,150. The remaining first and second lien debt investments were performing and current on their interest payments as of December 31, 2020 and 2019.
Credit Fund Facilities, 2017-1 Notes, 2019-2 Notes and Related Costs, Expenses and Deferred Financing Costs
Interest expense and unused commitment fees on the Credit Fund Facility and Credit Fund Sub Facility (collectively, the "Credit Fund Facilities") are recorded on an accrual basis. Unused commitment fees are included in credit facility fees in the accompanying Consolidated Statements of Operations.
The Credit Fund Facilities are recorded at carrying value, which approximates fair value.
Deferred financing costs include capitalized expenses related to the closing of the Credit Fund Facilities. Amortization of deferred financing costs for each credit facility is computed on the straight-line basis over the respective term of each credit facility. The amortization of such costs is included in credit facility fees in the accompanying Consolidated Statements of Operations.
Debt issuance costs include capitalized expenses including structuring and arrangement fees related to the offering of the 2017-1 Notes and 2019-2 Notes (collectively, the "Notes"). Amortization of debt issuance costs for the Notes is computed on the effective yield method over the term of the respective Notes. The unamortized balance of such costs is presented as a direct deduction to the carrying amount of the respective Notes in the accompanying Consolidated Statements of Assets, Liabilities and Members’ Equity. The amortization of such costs is included in interest expense in the accompanying Consolidated Statements of Operations.
The Notes are recorded at carrying value, which approximates fair value.
Organization Costs
Credit Fund agreed to reimburse each Member for initial organization costs incurred on behalf of Credit Fund up to $150 per member. As of both December 31, 2020 and 2019, $300 of organization costs had been incurred by Credit Fund and $28 of excess organization and offering costs had been incurred by TCG BDC. Credit Fund’s organization costs incurred are expensed when incurred.
Income Taxes
Credit Fund has elected to be treated as a partnership for U.S. federal income tax purposes. No provision is made for federal or state income taxes since income and losses are allocated to the individual Members who are responsible for reporting such and paying any taxes thereon. However, certain items of income distributed to Members may be subject to withholding or other taxes on behalf of those Members. Credit Fund has not recorded a liability for any uncertain tax positions pursuant to the provisions of Accounting Standards Codification (ASC) 740, Tax Provisions.
Credit Fund is not subject to federal and state taxes although it may be subject to local taxes in relation to loans originated by Credit Fund. Credit Fund is subject to New York City unincorporated business tax (“UBT”). For the years ended December 31, 2020 and 2019, UBT, including related interest and penalties, of $244 and $228, respectively, was included within other general and administrative in the accompanying Consolidated Statements of Operations.
The Credit Fund Sub, 2017-1 Issuer, 2019-2 Issuer and Credit Fund Warehouse II are disregarded entities for tax purposes and are consolidated with the tax return of Credit Fund.
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Allocations to Members
To the extent that Credit Fund has income (loss) net of expenses accrued in accordance with the LLC Agreement, net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments, calculated in accordance with U.S. GAAP, Credit Fund will allocate such amounts among the Members pro rata based on their respective membership interests in accordance with the LLC Agreement.
Capital Calls and Dividends and Distributions to Members
Capital contributions are made by the Members on a pro rata basis based on their respective capital commitments and recorded on the effective date of the contributions. To the extent that Credit Fund has taxable income available, Credit Fund intends to make distributions quarterly in an amount equal to the investment company taxable income and net capital gains (each as computed under Subchapter M of the Code) earned in the preceding quarter, shared among the Members on a pro rata basis based on their respective membership interests. Dividends and distributions to members are recorded on the record date. The amount to be distributed is determined by the Members with prior board approval each quarter and is generally based upon the taxable earnings estimated by management and available cash. Net realized capital gains, if any, are generally distributed at least annually, although Credit Fund may decide to retain such capital gains for investment. Such payments to Members relating to their membership interests are reflected as dividends.
The Members, with prior board approval, may determine to make a distribution in addition to that required above from available cash or cash equivalents received from one or more investments (whether from principal repayment or otherwise and after reduction of any applicable withholding or reserves). Any such distributions shall be shared among the Members as follows:
(i) first, to pay any outstanding loans made by a Member or its affiliates, with prior board approval, to temporarily fund obligations for valid company purposes listed in the LLC Agreement until capital contributions are made by the Members and any interest accrued thereon;
(ii) second, to the Members in respect of any accrued and unpaid interest on the subordinated loans contributed by Members as subsequent capital contributions to Credit Fund in proportion to the outstanding balances of such subordinated loans;
(iii) third, to the Members in respect of any unpaid principal amount of the subordinated loans contributed by Members as subsequent capital contributions to Credit Fund in proportion to the outstanding balance of such subordinated loans; and
(iv) fourth, to the Members as distributions in respect of their limited liability company interests in Credit Fund in proportion to their respective capital account balances.
Functional Currency    
The functional currency of Credit Fund is the U.S. Dollar and all transactions were in U.S. Dollars.
Recent Accounting Standards Updates
    On June 16, 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU is intended to introduce new guidance for the accounting for credit losses on instruments within scope based on an estimate of current expected credit losses. The guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. Credit Fund does not expect the adoption of ASU 2016-13 to have a material impact on its consolidated financial statements. Credit Fund adopted the new requirement starting with the quarter that began January 1, 2020. The adoption of this requirement did not have a material impact on Credit Fund's consolidated financial statements.
3. FAIR VALUE MEASUREMENTS
Credit Fund applies fair value accounting in accordance with the terms of Financial Accounting Standards Board ASC Topic 820, Fair Value Measurement (“ASC 820”). ASC 820 defines fair value as the amount that would be exchanged to sell an asset or transfer a liability in an orderly transfer between market participants at the measurement date. Credit Fund values securities/instruments traded in active markets on the measurement date by multiplying the closing price of such traded securities/instruments by the quantity of shares or amount of the instrument held. Credit Fund may also obtain quotes
19


with respect to certain of its investments, such as its securities/instruments traded in active markets and its liquid securities/instruments that are not traded in active markets, from pricing services, brokers, or counterparties (i.e., “consensus pricing”). When doing so, Credit Fund determines whether the quote obtained is sufficient according to U.S. GAAP to determine the fair value of the security. Credit Fund may use the quote obtained or alternative pricing sources may be utilized including valuation techniques typically utilized for illiquid securities/instruments.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of Credit Fund’s investments may fluctuate from period to period. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been reported had a ready market for the investments existed, and it is reasonably possible that the difference could be material.
In addition, changes in the market environment and other events that may occur over the life of the investments may cause the realized gains or losses on investments to be different from the net change in unrealized appreciation or depreciation currently reflected in the consolidated financial statements as of December 31, 2020 and 2019.
U.S. GAAP establishes a hierarchical disclosure framework which ranks the level of observability of market price inputs used in measuring investments at fair value. The observability of inputs is impacted by a number of factors, including the type of investment and the characteristics specific to the investment and state of the marketplace, including the existence and transparency of transactions between market participants. Investments with readily available quoted prices or for which fair value can be measured from quoted prices in active markets generally have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value.
Investments measured and reported at fair value are classified and disclosed based on the observability of inputs used in determination of fair values, as follows:
Level 1—inputs to the valuation methodology are quoted prices available in active markets for identical investments as of the reporting date. The types of financial instruments in Level 1 generally include unrestricted securities, including equities and derivatives, listed in active markets. Credit Fund does not adjust the quoted price for these investments, even in situations where Credit Fund holds a large position and a sale could reasonably impact the quoted price.
Level 2—inputs to the valuation methodology are either directly or indirectly observable as of the reporting date and are those other than quoted prices in active markets. The type of financial instruments in this category generally includes less liquid and restricted securities listed in active markets, securities traded in other than active markets, government and agency securities, and certain over-the-counter derivatives where the fair value is based on observable inputs.
Level 3—inputs to the valuation methodology are unobservable and significant to overall fair value measurement. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are in this category generally include investments in privately-held entities and certain over-the-counter derivatives where the fair value is based on unobservable inputs.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the overall fair value measurement. Credit Fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment.
Transfers between levels, if any, are recognized at the beginning of the year in which the transfers occur. For the years ended December 31, 2020 and 2019, there were no transfers between levels.
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The following tables summarize Credit Fund’s investments measured at fair value on a recurring basis by the above fair value hierarchy levels as of December 31, 2020 and 2019:
 December 31, 2020
 Level 1
Level 2
Level 3
Total
Assets    
First Lien Debt$— $— $1,029,687 $1,029,687 
Second Lien Debt— — 24,113 24,113 
Equity Investments— — 2,581 2,581 
Total$— $— $1,056,381 $1,056,381 
 December 31, 2019
 Level 1Level 2Level 3Total
Assets    
First Lien Debt$— $— $1,223,215 $1,223,215 
Second Lien Debt— — 21,814 21,814 
Equity Investments— — 1,810 1,810 
Total$— $— $1,246,839 $1,246,839 
    The changes in Credit Fund’s investments at fair value for which Credit Fund has used Level 3 inputs to determine fair value and net change in unrealized appreciation (depreciation) included in earnings for Level 3 investments still held are as follows:
Financial Assets for the Year Ended December 31, 2020
 First Lien DebtSecond Lien Debt Equity InvestmentsTotal
Balance, beginning of year$1,223,215 $21,814 $1,810 $1,246,839 
Purchases351,260 2,962 — 354,222 
Sales(17,391)— (17,391)
Paydowns(518,213)(666)— (518,879)
Accretion of discount4,314 115 — 4,429 
Net realized gains (losses)— — — — 
Net change in unrealized appreciation (depreciation)(13,498)(112)771 (12,839)
Balance, end of year$1,029,687 $24,113 $2,581 $1,056,381 
Net change in unrealized appreciation (depreciation) included on the Consolidated Statements of Operations related to investments still held at the reporting date$(18,610)$(108)$771 $(17,947)
Financial Assets for the Year Ended December 31, 2019
 First Lien DebtSecond Lien DebtEquity InvestmentsTotal
Balance, beginning of year$1,172,460 $1,048 $— $1,173,508 
Purchases452,968 20,626 5,364 478,958 
Sales(41,731)— — (41,731)
Paydowns(374,073)(384)— (374,457)
Accretion of discount5,058 77 — 5,135 
Net realized gains (losses)(8,285)— — (8,285)
Net change in unrealized appreciation (depreciation)16,818 447 (3,554)13,711 
Balance, end of year$1,223,215 $21,814 $1,810 $1,246,839 
Net change in unrealized appreciation (depreciation) included on the Consolidated Statements of Operations related to investments still held at the reporting date$6,535 $447 $(3,554)$3,428 
 

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Credit Fund generally uses the following framework when determining the fair value of investments that are categorized as Level 3:
Investments in debt securities are initially evaluated to determine whether the enterprise value of the portfolio company is greater than the applicable debt. The enterprise value of the portfolio company is estimated using a market approach and an income approach. The market approach utilizes market value (EBITDA) multiples of publicly traded comparable companies and available precedent sales transactions of comparable companies. Credit Fund carefully considers numerous factors when selecting the appropriate companies whose multiples are used to value its portfolio companies. These factors include, but are not limited to, the type of organization, similarity to the business being valued, relevant risk factors, as well as size, profitability and growth expectations. The income approach typically uses a discounted cash flow analysis of the portfolio company.
Investments in debt securities that do not have sufficient coverage through the enterprise value analysis are valued based on an expected probability of default and discount recovery analysis.
Investments in debt securities with sufficient coverage through the enterprise value analysis are generally valued using a discounted cash flow analysis of the underlying security. Projected cash flows in the discounted cash flow typically represent the relevant security’s contractual interest, fees and principal payments plus the assumption of full principal recovery at the security’s expected maturity date. The discount rate to be used is determined using an average of two market-based methodologies. Investments in debt securities may also be valued using consensus pricing.
The following table summarizes the quantitative information related to the significant unobservable inputs for Level 3 instruments which are carried at fair value as of December 31, 2020 and 2019:
Range
Fair Value as of December 31, 2020Valuation TechniquesSignificant Unobservable InputsLowHighWeighted Average
Investments in First Lien Debt$749,615 Discounted Cash FlowDiscount Rate3.56 %10.37 %6.91 %
280,072 Consensus PricingIndicative Quotes73.00 100.00 95.64 
Total First Lien Debt1,029,687 
24,113 Income ApproachDiscount Rate11.73 %11.73 %11.73 %
Market ApproachComparable Multiple6.89x6.89x6.89x
Total Second Lien Debt24,113 
Equity Investments2,581 Income ApproachDiscount Rate11.73 %11.73 %11.73 %
Market ApproachComparable Multiple6.89x6.89x6.89x
Total Equity Investments2,581 
Total Level 3 Investments$1,056,381 

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Range
Fair Value as of December 31, 2019Valuation TechniquesSignificant Unobservable InputsLowHighWeighted Average
Investments in First Lien Debt$1,011,544 Discounted Cash FlowDiscount Rate3.86 %7.83 %5.57 %
211,671 Consensus PricingIndicative Quotes76.50 100.17 96.39 
Total First Lien Debt1,223,215 
Investments in Second Lien Debt664 Discounted Cash FlowDiscount Rate10.23 %10.23 %10.23 %
21,150 Income ApproachDiscount Rate10.33 %10.33 %10.33 %
Market ApproachComparable Multiple8.73x8.73x8.73x
Total Second Lien Debt21,814 
Equity Investments1,810 Income ApproachDiscount Rate10.33 %10.33 %10.33 %
Market ApproachComparable Multiple8.73x8.73x8.73x
Total Equity Investments1,810 
Total Level 3 Investments$1,246,839 

The significant unobservable inputs used in the fair value measurement of Credit Fund’s investments in first and second lien debt securities are discount rates and indicative quotes. Significant increases in discount rates would result in a significantly lower fair value measurement. Significant decreases in indicative quotes in isolation may result in a significantly lower fair value measurement.

The significant unobservable inputs used in the fair value measurement of the Company's investment in equities are discount rates and comparable EBITDA multiples. Significant increases in discount rates would result in a significantly lower fair value measurement. Significant decreases in comparable EBITDA multiples would result in a significantly lower fair value measurement.

Financial instruments disclosed but not carried at fair value
The following table presents the carrying value and fair value of Credit Fund’s secured borrowings, mezzanine loans, and subordinated loans disclosed but not carried at fair value as of December 31, 2020 and 2019:         
 December 31, 2020December 31, 2019
 Carrying Value Fair Value Carrying Value Fair Value
Secured borrowings$514,261 $514,261 $441,077 $441,077 
Mezzanine loans— — 93,000 93,000 
Subordinated loans432,000 411,782 247,000 226,128 
Total$946,261 $926,043 $781,077 $760,205 
 
    The carrying values of the secured borrowings and mezzanine loans approximate their respective fair values and are categorized as Level III within the hierarchy.
    Secured borrowings are valued generally using discounted cash flow analysis. The significant unobservable inputs used in the fair value measurement of Credit Fund’s secured borrowings are discount rates. Significant increases in discount rates would result in a significantly lower fair value measurement.
    Mezzanine loans and subordinated loans are valued using discounted cash flow analysis with expected recovery rate of principal and interest. The significant unobservable inputs used in the fair value measurement of the mezzanine loans are recovery rates of principal and interest. Significant decreases in recovery rates would result in a significantly lower fair value measurement. The significant unobservable inputs used in the fair value measurement of the subordinated loans are discount
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rates, default rates and recovery rates. Significant increases in discount rates or default rates would result in a significantly lower fair value measurement. Significant decreases in recovery rates would result in a significantly lower fair value measurement.

    The following table represents the carrying values (before debt issuance costs and discount) and fair values of Credit Fund’s 2017-1 Notes disclosed but not carried at fair value as of December 31, 2019. The 2017-1 Notes were fully redeemed as of December 31, 2020.
 December 31, 2019
2017-1 NotesCarrying Value Fair Value
Class A-1 Notes$90,373 $90,046 
Class A-2 Notes48,300 47,845 
Class B-1 Notes15,000 14,703 
Class B-2 Notes9,000 8,876 
Class C Notes22,900 22,213 
Class D Notes25,100 24,422 
Total$210,673 $208,105 

The following table represents the carrying values (before debt issuance costs and discount) and fair values of Credit Fund’s 2019-2 Notes disclosed but not carried at fair value as of December 31, 2020 and 2019.
 December 31, 2020December 31, 2019
2019-2 NotesCarrying Value Fair Value Carrying ValueFair Value
Class A-1 Notes$136,832 $136,613 $203,366 $203,136 
Class A-2 Notes48,000 47,916 48,000 48,245 
Class B Notes23,000 23,002 23,000 23,249 
Class C Notes27,000 26,312 27,000 27,000 
Class D Notes21,000 19,551 21,000 21,000 
Total$255,832 $253,394 $322,366 $322,630 
    The fair value determination of the Notes was based on the market quotation(s) received from broker/dealer(s). These fair value measurements were based on significant inputs not observable and thus represent Level 3 measurements as defined in the accounting guidance for fair value measurement.

    The carrying value of other financial assets and liabilities approximates their fair value based on the short term nature of these items.
4. RELATED PARTY TRANSACTIONS
Administration Agreement
On February 29, 2016, Credit Fund’s Board of Managers approved an administration agreement (the “Administration Agreement”) between Credit Fund and the Administrator. Pursuant to the Administration Agreement, the Administrator provides services and receives reimbursements equal to an amount that reimburses the Administrator for its costs and expenses and Credit Fund’s allocable portion of overhead incurred by the Administrator in performing its obligations under the Administration Agreement, including Credit Fund’s allocable portion of the compensation paid to or compensatory distributions received by Credit Fund’s officer and respective staff who provide services to Credit Fund, operations staff who provide services to Credit Fund. Reimbursement under the Administration Agreement occurs quarterly in arrears.
The initial term of the Administration Agreement was two years from February 29, 2016 and, unless terminated earlier, the Administration Agreement renews automatically for successive annual periods. The Administration Agreement may not be assigned by a party without the consent of the other party and may be terminated by either party without penalty upon at least 60 days’ written notice to the other party.
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For the years ended December 31, 2020 and 2019 Credit Fund incurred $113 and $137, respectively, in fees under the Administrative Agreement, which were included in administrative service fees in the accompanying Consolidated Statements of Operations. As of December 31, 2020 and 2019, $18 and $14, respectively, was unpaid and included in other accrued expenses and liabilities in the accompanying Consolidated Statements of Assets, Liabilities and Members’ Capital.
Sub-Administration Agreements
On February 29, 2016, the Administrator entered into sub-administration agreements with Carlyle Employee Co. Pursuant to the agreement, Carlyle Employee Co. provides the Administrator with access to personnel.
On April 5, 2016, the Administrator entered into a sub-administration agreement with State Street Bank and Trust Company (the “Sub-Administration Agreement”). This Agreement shall commence on the date hereof and shall continue in full force and effect until terminated. The Sub-Administration Agreement may not be assigned by a party without the consent of the other party and may be terminated by either party without penalty upon at least 60 days’ written notice to the other party.
For the years ended December 31, 2020 and 2019, fees incurred in connection with the Sub-Administration Agreement, which amounted to $300 and $300, respectively, were included in other general and administrative in the accompanying Consolidated Statements of Operations. As of December 31, 2020 and 2019, $500 and $150, respectively, was unpaid and included in other accrued expenses and liabilities in the accompanying Consolidated Statements of Assets, Liabilities and Members’ Capital.
Transactions with TCG BDC
During the years ended December 31, 2020 and 2019 , the Credit Fund purchased four and four investments, respectively, from TCG BDC for proceeds of $62,754 and $34,728, respectively.
Other
No management or incentive fees are incurred by Credit Fund.

5. BORROWINGS
Credit Fund Facilities
The Credit Fund, Credit Fund Sub and Credit Fund Warehouse II are party to separate credit facilities as described below. In addition, until May 15, 2019, the 2019-2 Issuer (formerly known as the Credit Fund Warehouse) was party to the Credit Fund Warehouse Facility. As of December 31, 2020, Credit Fund, Credit Fund Sub, and Credit Fund Warehouse II were in compliance with all covenants and other requirements of their respective credit facility agreements. As of December 31, 2019, Credit Fund, Credit Fund Sub and the 2019-2 Issuer were in compliance with all covenants and other requirements of their respective credit facility agreements. Below is a summary of the borrowings and repayments under the credit facilities for the respective periods.
Credit Fund
Facility
Credit Fund Sub
Facility
Credit Fund Warehouse FacilityCredit Fund Warehouse II Facility
Outstanding balance as of December 31, 2018$112,000 $471,134 $101,044 
Borrowings126,200 223,870 34,544 $97,571
Repayments(145,200)(351,498)(135,588)
Outstanding balance as of December 31, 201993,000 343,506 — 97,571 
Borrowings63,500 269,313 — 54,373 
Repayments(156,500)(191,960)— (58,542)
Outstanding balance as of December 31, 2020$— $420,859 $— $93,402 
    Credit Fund Facility. On June 24, 2016, Credit Fund closed on the Credit Fund Facility, which was subsequently amended on June 5, 2017, October 2, 2017, November 3, 2017, June 22, 2018, June 29, 2018, February 21, 2019, March 20, 2020 and February 22, 2021, from which Credit Fund may from time to time request mezzanine loans from TCG BDC. The maximum principal amount of the Facility is $175,000, subject to availability under the Credit Fund Facility, which is based on certain advance rates multiplied by the value of Credit Fund’s portfolio investments net of certain other indebtedness that
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Credit Fund may incur in accordance with the terms of the Credit Fund Facility. Proceeds of the Credit Fund Facility may be used for general corporate purposes, including the funding of portfolio investments. Amounts drawn under the Credit Fund Facility bear interest at the greater of zero and LIBOR plus an applicable spread of 9.00% and such interest payments are made quarterly. The availability period under the Credit Fund Facility will terminate on March 22, 2021 (May 21, 2022 following the February 22, 2021 amendment), which is also its maturity date upon which Credit Fund is obligated to repay any outstanding borrowings.
    Credit Fund Sub Facility. On June 24, 2016, the Credit Fund Sub closed on the Credit Fund Sub Facility with lenders, which was subsequently amended on May 31, 2017, October 27, 2017, August 24, 2018, December 12, 2019 and March 11, 2020. The Credit Fund Sub Facility provides for secured borrowings during the applicable revolving period up to an amount equal to $640,000 (the borrowing base as calculated pursuant to the terms of the Credit Fund Sub Facility). The aggregate maximum credit commitment can be increased up to an amount not to exceed $1,400,000, subject to certain restrictions and conditions set forth in the Credit Fund Sub Facility, including adequate collateral to support such borrowings. The Credit Fund Sub Facility has a revolving period through May 21, 2021 and a maturity date of May 22, 2024, which may be extended by mutual agreement of the parties to the Credit Fund Sub Facility. Borrowings under the Credit Fund Sub Facility bear interest initially at the applicable commercial paper rate (if the lender is a conduit lender) or LIBOR (or, if applicable, a rate based on the prime rate or federal funds rate) plus 2.25% per year during the revolving period and plus 3.75% per year thereafter. The Credit Fund Sub is also required to pay an undrawn commitment fee of between 0.50% and 0.75% per year depending on the usage of the Credit Fund Sub Facility. Payments under the Credit Fund Sub Facility are made quarterly. Subject to certain exceptions, the Facility is secured by a first lien security interest in substantially all of the portfolio investments held by the Credit Fund Sub.
    Credit Fund Warehouse Facility. On November 26, 2018, Credit Fund Warehouse closed on the Credit Fund Warehouse Facility with lenders. The Credit Fund Warehouse Facility provided for secured borrowings during the applicable revolving period up to an amount equal to $150,000. The Credit Fund Warehouse Facility was secured by a first lien security interest in substantially all of the portfolio investments held by the Credit Fund Warehouse. The maturity date of the Credit Fund Warehouse Facility was November 26, 2019. Amounts borrowed under the Credit Fund Warehouse Facility bore interest at a rate of LIBOR plus 1.05%. Effective May 15, 2019, the Warehouse Facility changed its name from “MMCF Warehouse, LLC” to “MMCF CLO 2019-2, LLC” and secured borrowings outstanding were repaid in connection with the 2019-2 Debt Securitization.
    Credit Fund Warehouse II Facility. On August 16, 2019, Credit Fund Warehouse II closed on a revolving credit facility (the "Credit Fund Warehouse II Facility") with lenders. The Credit Fund Warehouse II Facility provides for secured borrowings during the applicable revolving period up to an amount equal to $150,000. The Credit Fund Warehouse II Facility is secured by a first lien security interest in substantially all of the portfolio investments held by the Credit Fund Warehouse II Facility. The maturity date of the Credit Fund Warehouse II Facility is August 16, 2022. Amounts borrowed under the Credit Fund Warehouse II Facility bear interest at a rate of LIBOR plus 1.15% until August 2021. Amounts borrowed under the Credit Fund Warehouse II Facility during the first 12 months bore interest at a rate of LIBOR plus 1.05%, and amounts borrowed in the final 12 months will bear interest at LIBOR plus 1.50%.

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Summary of Facilities
The facilities of Credit Fund, Credit Fund Sub, Credit Fund Warehouse and Credit Fund Warehouse II consisted of the following as of December 31, 2020 and 2019:
 December 31, 2020
 Total Facility Borrowings
Outstanding
Unused 
Portion (1)
Secured borrowings - Credit Fund Sub Facility$640,000 $420,859 $219,141 
Secured borrowings - Credit Fund Warehouse Facility II150,000 93,402 56,598 
Mezzanine loans175,000 — 175,000 
Total$965,000 $514,261 $450,739 
 December 31, 2019
 Total Facility Borrowings
Outstanding
Unused 
Portion (1)
Secured borrowings - Credit Fund Sub Facility$640,000 $343,506 $296,494 
Secured borrowings - Credit Fund Warehouse Facility150,000 97,571 52,429 
Mezzanine loans175,000 93,000 82,000 
Total$965,000 $534,077 $430,923 
(1)The unused portion is the amount upon which commitment fees are based.

As of December 31, 2020 and 2019, $3,025 and $6,716 of interest expense, respectively, $283 and $567 of unused commitment fees, respectively, and $131 and $41 of other fees, respectively, were included in interest and credit facility fees payable. As of December 31, 2020 and 2019, the interest rate was 2.20% and 5.17%, respectively, based on floating LIBOR rates. For the years ended December 31, 2020 and 2019, the weighted average interest rates were 3.75% and 5.83%.  For the years ended December 31, 2020 and 2019, average principal debt outstanding was $493,374 and $585,401, respectively

For the years ended December 31, 2020 and 2019, the components of interest expense and credit facility fees on the facilities were as follows:
For the years ended December 31,
 20202019
Interest expense$18,505 $34,110 
Facility unused commitment fee1,493 1,772 
Amortization of deferred financing costs949 951 
Other fees143 86 
Total interest expense and credit facility fees$21,090 $36,919 
Cash paid for interest expense$18,698 $36,891 
6. NOTES
2017-1 Notes
On December 19, 2017, Credit Fund completed the 2017-1 Debt Securitization. The notes offered in the 2017-1 Debt Securitization (the “2017-1 Notes”) were issued by the 2017-1 Issuer, a wholly owned and consolidated subsidiary of Credit Fund, and are secured by a diversified portfolio of the 2017-1 Issuer consisting primarily of first and second lien senior secured loans. The 2017-1 Debt Securitization was executed through a private placement of the 2017-1 Notes, consisting of:
$231,700 of Aaa/AAA Class A-1 Notes, which bear interest at the three-month LIBOR plus 1.17%;
$48,300 of Aa2/AA Class A-2 Notes, which bear interest at the three-month LIBOR plus 1.50%;
$15,000 of A2/A Class B-1 Notes, which bear interest at the three-month LIBOR plus 2.25%;
$9,000 of A2/A Class B-2 Notes which bear interest at 4.30%;
$22,900 of Baa2/BBB Class C Notes which bear interest at the three-month LIBOR plus 3.20%; and
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$25,100 of Ba2/BB Class D Notes which bear interest at the three-month LIBOR plus 6.38%.
    The 2017-1 Notes are scheduled to mature on January 15, 2028. Credit Fund received 100% of the preferred interests issued by the 2017-1 Issuer (the “2017-1 Issuer Preferred Interests”) on the closing date of the 2017-1 Debt Securitization in exchange for Credit Fund's contribution to the 2017-1 Issuer of the initial closing date loan portfolio. The 2017-1 Issuer Preferred Interests do not bear interest and had a nominal value of $47,900 at closing.
On the closing date of the 2017-1 Debt Securitization, the 2017-1 Issuer effected a one-time distribution to the Credit Fund of a substantial portion of the proceeds of the private placement of the 2017-1 Notes, net of expenses, which distribution was used to repay a portion of certain amounts outstanding under the Credit Fund Sub Facility and the Credit Fund Facility. As part of the 2017-1 Debt Securitization, certain first and second lien senior secured loans were distributed by the Credit Fund Sub to the Company pursuant to a distribution and contribution agreement. Credit Fund contributed the loans that comprised the initial closing date loan portfolio (including the loans distributed to Credit Fund from the Credit Fund Sub) to the 2017-1 Issuer pursuant to a contribution agreement. Assets of the 2017-1 Issuer are not available to the creditors of the Credit Fund Sub or Credit Fund. In connection with the issuance and sale of the 2017-1 Notes, Credit Fund made customary representations, warranties and covenants in the purchase agreement. The 2017-1 Notes were fully redeemed during the year ended December 31, 2020.
Credit Fund (the “Servicer”) serves as servicer to the 2017-1 Issuer under a servicing agreement (the “Servicing Agreement”). Pursuant to the Servicing Agreement, the 2017-1 Issuer paid servicing fees (“Servicing Fees”) to the Servicer for servicing the portfolio. As per the Servicing Agreement, for the period Credit Fund retains all of the 2017-1 Issuer Preferred Interests, the Servicer did not earn Servicing Fees for providing such portfolio servicing. Credit Fund retained all of the 2017-1 Issuer Preferred Interests, thus the Servicer did not earn any Servicing Fees from the 2017-1 Issuer for the year ended December 31, 2020. Any such waived fees were not recaptured by the Servicer.
The 2017-1 Issuer paid ongoing administrative expenses to the trustee, independent accountants, legal counsel, rating agencies and independent managers in connection with developing and maintaining reports, and providing required services in connection with the administration of the 2017-1 Issuer.    
For the period from January 1, 2020 through redemption dated December 9, 2020, and the year ended December 31, 2019, the weighted average interest rate, which includes amortization of debt issuance costs on the 2017-1 Notes, were 2.50% and 4.21% respectively, based on floating LIBOR rates.
For the period from January 1, 2020 through redemption dated December 9, 2020 and the year ended December 31, 2019, the components of interest expense on the 2017-1 Notes were as follows:
For the years ended December 31,
 20202019
Interest expense$6,062 $