It all depends on the terms of the fund, which I obviously...

It all depends on the terms of the fund, which I obviously haven't seen, but the market standard for single-asset PE funds like this is that the performance fee is only payable if cash-on-cash returns exceed a certain hurdle, typically 6-8% IRR.

What I understand that BLA have been doing is accruing as a long-term receivable the performance fee that would be payable upon exit assuming that the asset is sold at their (now known to be inflated) internal valuation. The other side of this entry would obviously be to credit profit. So if the performance fee is now not actually payable because the asset hasn't achieved the required hurdle, the receivable will have to be written off and profit debited accordingly.

You're absolutely right that the far more significant long term effect is their ability to continue to get the dogs to eat the dog food given all the negative publicity around.