I think there's a non-zero chance of Option 3 or something else...

I think there's a non-zero chance of Option 3 or something else almost as painful. They don't call these sorts of debt funds "loan to own" for nothing. Plus the chance of BLA getting a capital raise of that size up is close to zero, and even if they could it would be so dilutive to existing shareholders that you might as well just hand the company over. Might be quite a good outcome for Oaktree to take over the management of all these funds with the run-off fees for just $50m.

No chance at all of Option 1, as you say this would be totally out of character.