SEC Receiver’s Plan is Unfair to Proactive Medical Capital Noteholders


In the Medical Capital Receiver case, the SEC Receiver recently filed the “Receiver’s Proposed Plan for Distribution” (the “Plan”) which contains some disturbing news for those investors who were pro-active 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 that an investor 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 you had a $90,000 claim) and the Receiver’s 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.

Absent some very specific circumstances not present in this case, third-party recoveries are generally not taken into account in distributions made by a receiver, or in the alternative, third party recovery is just netted against the total claim in the same way that interest received on the investment is treated. The money individuals have collected from third-parties should not affect their ability to collect from the Receiver’s fund. The Receiver’s Fund is a completely separate set of funds derived directly from the Medical Capital assets. The Receiver’s Proposed Plan penalizes those individuals who were pro-active to seek 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 Receiver.

If you have receive 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 ( 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 is currently representing clients that plan to object to the SEC Receiver’s proposed Plan. Page Perry is an Atlanta-based law firm with over 170 years collective experience protecting investor rights and fighting Wall Street greed.