After a week full of bad news for Third Avenue [profile], Mary Jo White has some good news for the beleaguered fund firm. The SEC just gave its blessing to Third Avenue shutting the gate of its fallen Focused Credit Fund. Yet the New York-based mutual fund shop is also changing its liquidation plan for the fund.

W. James Hall Third Avenue Management General Counsel, Security

Third Avenue's management told the fund's shareholders, and the public, that yesterday the SEC granted Third Avenue's request for an exemptive relief order. Last week, over concerns about liquidity of underlying securities, Third Avenue shut off redemptions from its bleeding fund; the new exemptive order suspends redemptions. The SEC had already been investigating the situation.

Yet the liquidation of the fallen fund won't go down as Third Avenue initially planned. Last week Third Avenue moved the fund's non-cash assets, and some cash, into a separate liquidating trust that would slowly wind down and pay back the fund's shareholders. Now Third Avenue will move the assets back into the fund, with all the reporting requirements (like daily NAVs) that that entails, and then distribute periodically from there. And the order gives Focused Credit Fund PM Tom Lapointe and the rest of the Third Avenue team more time to further plan out the liquidation.

David Resnick Third Avenue Management President, Chief Investment Officer

Jim Hall, Third Avenue's general counsel, explains how they got here:

When the Board initially adopted the liquidation plan, we utilized a legal structure that we believed would protect all of our shareholders in the required time frame. We had conversations with the SEC staff both before and after the public announcement of the liquidation plan for FCF, which subsequently resulted in the recommendation to the Board to return FCF to its original Fund structure. The new structure relied heavily on the SEC's ability to provide exemptive relief to FCF on an expedited basis. We believe that this result benefits shareholders by providing greater reporting transparency -- and we believe that amounts returnable to FCF shareholders will not be affected by the new structure.

Yesterday the fund's shareholders received their first cash out of the fund, representing about nine percent of its capital.

And like all the recent bad news, Third Avenue's good SEC news is getting lots of press. Here are some publications that have weighed in so far:

Bloomberg, "Third Avenue Allowed to Temporarily Halt Redemptions by SEC";

the Boston Globe, "Withdrawals halted from failed junk bond fund";

MarketWatch, "Third Avenue settles with SEC over junk-bond fund";

Morningstar, "Third Avenue Focused Credit Returns to a Fund Structure";

the New York Times, "Junk Bond Fund That Barred Investor Redemptions Reaches Deal With S.E.C.";

TheStreet, "Third Avenue Gets SEC's Permission to Freeze Redemptions; and

the Wall Street Journal, "Third Avenue Reaches Deal With SEC Over Troubled Fund". 

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