Medical Capital Update: SEC Receiver's Proposed Distribution Plan Penalizes Those Who Obtained Recoveries From Third Party Sources

ATLANTA, Dec. 12, 2011 /PRNewswire/ -- In connection with the Medical Capital receivership, the SEC Receiver recently filed its "Proposed Plan for Distribution."   Unfortunately, the Plan contains some disturbing news for those investors who were proactive and obtained recoveries against third parties through litigation (including class actions) or arbitration. 

As proposed in the Plan (set forth on page 14 section 4), the Receiver would deduct any funds anyone received from third parties in arbitration or litigation dollar for dollar against any sums that would be due from the Receiver.

What this means is anyone who received any kind of recovery in arbitration or litigation from third parties will receive nothing from the Receiver's fund.  As an example, if an investor had a $100,000 note and had received $10,000 in interest (meaning the investor had a $90,000 claim) and the payout was 10%, that investor would normally receive $9,000.  Under the Receiver's plan, however, if the investor received $9,000 or more from another source, that investor would receive nothing from the Receiver. 

According to attorney Pratt H. Davis at Page Perry, LLC, a securities arbitration and litigation firm, "absent some very specific circumstances not present in this case, third party recoveries are generally not taken into account in a receiver's distributions, or in the alternative, the recovery is just netted out of the total claim in the same manner as any interest received on the investment."  According to Mr. Davis, "the money individuals have collected from third parties should not affect their ability to collect from the Receiver's fund. The Receiver's Proposed Plan penalizes those individuals who brought a legal action to recover their losses and sends a message that by doing nothing an investor is better off in terms of the recovery he or she receives from the SEC."

If you have received funds from third party sources related to investments in Medical Capital and disagree with the SEC Receiver's proposed Plan, you can follow the Receiver's website (http://www.medicalcapitalreceivership.com/) and make sure you file an objection to the Motion for Approval of the Distribution Plan when it is filed or retain legal counsel to file an objection on your behalf.

Page Perry, LLC is an Atlanta-based law firm with over 170 years collective experience protecting investor rights.

Attorney Contact:  Pratt H. Davis, Page Perry, LLC, Atlanta, GA, www.pageperry.com, 770-673-0047.

SOURCE Page Perry, LLC