(Adds Third Avenue representative declined to comment, paragraph 4)
Dec 13 (Reuters) - Third Avenue Management LLC has parted ways with Chief Executive Officer David Barse after the collapse of the company's junk bond fund last week, the Wall Street Journal reported on Sunday, citing sources familiar with the matter.
The collapse of Third Avenue's Focused Credit Fund jolted Wall Street and renewed worries about the difficulty of trading securities on the U.S. bond market. New York-based Third Avenue is a relatively small investment manager with fund assets that totaled $10 billion at the beginning of the year.
A security guard at Third Avenue's headquarters said on Sunday that Barse had been let go and was not allowed back in the building, the Wall Street Journal reported.
A Third Avenue representative declined to comment. Barse did not respond to calls. His work email bounced back with the message "undeliverable".
Third Avenue's Focused Credit Fund was overwhelmed with heavy losses and surging investor net withdrawals, forcing Barse to abruptly liquidate the fund and block redemptions.
The redemptions and losses over the past year cut the size of the Third Avenue Focused Credit Fund to $789 million from nearly $3 billion. Run by Tom Lapointe, the fund bet on distressed situations, such as the bankruptcy-related claims of Lehman Brothers. In a letter to investors last year, Lapointe, who could not immediately be reached for comment, said distressed assets in his portfolio were not necessarily illiquid or hard to trade.
The fund's collapse is a blow to the reputation of Third Avenue Founder Marty Whitman, considered the dean of American vulture investing. He hired Barse in 1991 to oversee the firm's operations so he could spend more time pursuing his own investment strategies.
Whitman could not be reached for comment.
The blow-up of the Focused Credit Fund was the biggest mutual fund failure since the financial crisis. The fund's collapse shows the dangers of loading up on risky assets that are hard to trade even in good times.
Before Barse, 53, joined Third Avenue, he worked as a bankruptcy attorney defending the rights of creditors. He had been CEO of Third Avenue since 2003.
Whitman was a leader in a strategy that includes bets on the outcomes of companies going through bankruptcy and other distressed situations. The 91-year-old's book titled "Distress Investing" distills decades of knowledge about the ins and outs of bankruptcy restructuring.
In 2002, Affiliated Managers Group Inc bought a majority equity stake in Third Avenue, with the remaining portion held by a broad group of employees that included Whitman and Barse. Third Avenue, however, continued to operate autonomously from AMG, which holds stakes in a number of boutique asset management firms. AMG could not immediately be reached for comment.
(Reporting by Sam Forgione, Tim McLaughlin and Ross Kerber; editing by Grant McCool)