Last year, Citibank made what was likely the costliest bank
error in history. To the astonishment of many observers, a U.S.
federal court in New York, in a decision released on February 16,
2021, allowed the recipients of Citibank's mistaken largesse
to keep the money. The story has attracted widespread media
attention but is by no means over. Citibank's appeal remains
pending, and Citibank and other financial institutions are
continuing their efforts to limit the damage. Looking at this
cautionary tale from north of the border, it's natural to
wonder “Could it (legally) happen here?”
Citibank's Error
Citibank was the administrative agent for a syndicated term loan
to Revlon. For a partial restructuring of the facility, Revlon
agreed to make about US$7.8 million in interest payments to the
lenders. In setting up the wire transfers to make the payments, on
August 11, 2020, Citibank accidentally paid off the facility in
full, including the entire principal amount
