In March 2011, Judge Daniels in the Southern District of New York approved the plan of distribution supported by client Carnegie Mellon University in the $815 million Westridge Capital receivership case, SEC v. WG Trading Investors, L.P. et al., 09-CIV-1750 (S.D.N.Y). During the March hearing, Scott Humphries, representing Carnegie Mellon University and speaking on behalf of 16 similarly situated institutional investors, responded to numerous investors’ objections to the Receiver’s proposed plan and to proposed alternate plans, some of which sought to distribute virtually all the receivership’s assets to objecting investors. After an all-day argument, Judge Daniels overruled the objections and approved the proposed plan from the bench. The order was signed March 21, 2011. After the Second Circuit denied an expedited appeal to stay Judge Daniel’s order, Carnegie Mellon University received its $30 million distribution from the Receivership, bringing the University’s total distributions from the Receivership to over $40 million.
The firm then handled the substantive appeal of the distribution order before the Second Circuit on behalf of the University. The hearing on the appeal took place May 16, 2012.
On April 3, 2013, the Second Circuit affirmed Judge Daniel’s ruling adopting a receivership distribution plan recommended by Gibbs & Bruns. The Second Circuit decision, CFTC v. 3M Employee Welfare Benefit Association Trust I, et al., 2013 WL 1324054 (2d Cir. April 3, 2013), quoted from the trial court oral argument of Scott Humphries in concluding that the district court was well within its discretion to reject the several independent attacks on Carnegie Mellon’s proffered distribution plan. The Second Circuit’s decision not only confirms Carnegie Mellon’s beneficial interest in the Westridge Capital receivership’s initial $815 million distribution to investors, but also provides the University a favorable interest in the future distributions expected from the receivership.