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Fund Times

Third Avenue Focused Credit Returns to a Fund Structure

Returning to the open-end format provides more transparency for shareholders but changes little else.

The Third Avenue Focused Credit saga took another turn Wednesday when Third Avenue announced a different structure for liquidating shareholder assets.

What was the original plan?
Faced with crippling shareholder redemptions and amid a challenging high-yield bond market, Third Avenue announced a plan on Dec. 9, 2015, to shutter Third Avenue Focused Credit because many of its low-rated holdings had become too illiquid to sell. That plan stipulated Third Avenue transfer the portfolio to a liquidating trust, while paying a distribution to shareholders that represented the current cash in the fund on Dec. 16, 2015. Shareholders would subsequently receive proceeds from the fund only when management received income or was able to dispose of assets at prices it deemed fair. Third Avenue said it could take up to a year for the portfolio to be fully liquidated.

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