(Bloomberg) -- Third Avenue Management, which halted redemptions in a distressed-debt fund last month after losses and withdrawals, was sued by an investor who said the firm failed to maintain adequate liquidity despite signs the fixed-income market was increasingly volatile.

William Engel, a Vermont resident who owned shares of the Focused Credit Fund, claims the firm failed to comply with its "most fundamental and basic duty -- to manage and maintain sufficient liquidity for the fund to stay open and in business." He seeks $500 million in restitution and damages.

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