Marc Lasry is staying at Avenue Capital and is no longer in the running to be the U.S. ambassador to France.
In a letter to investors Tuesday, Lasry said he was "grateful to be considered" but would instead remain at the firm, which manages $11.5 billion, as its chairman and chief executive, according to sources familiar with the matter.
The vetting process had become cumbersome and was holding up projects that Avenue planned to pursue, according to a source. One point of contention: the $3.7 billion in funds Avenue had earmarked for European investment.
Sources said that preliminary discussions focused on placing the European assets, as well as Lasry's majority stake, in a blind trust to avoid a conflict of interest.
The CEO's remaining in the job obviates such engineering. A spokesman for Avenue declined to comment.
A longtime bundler for the Democratic Party, Lasry was heavily involved in fundraising for President Barack Obama, hosting a $40,000-per-plate dinner at NoMad restaurant in Manhattan.
Previous press reports had suggested that Anna Wintour, editor-in-chief of Vogue, could also be a candidate for the ambassadorship.
—Written by CNBC's Kayla Tausche