Citibank Gets Its Money Back

A February 16, 2021 decision of the United States District Court for the Southern District of New York held, in In re Citibank August 11, 2020 Wire Transfers, 520 F. Supp. 3d 390, that lenders who received almost $900 million mistakenly wired to them by Citibank (the administrative agent for a $1.8-billion syndicated seven-year term loan to Revlon [2016 Loan]) were entitled to keep the money. See our bulletin A One-in-a-Billion (-Dollar) Mistake, in which we describe the decision. The United States Court of Appeals for the Second Circuit has now reversed that decision.

The District Court Decision

The District Court had held that the lenders were protected by a doctrine known as the "discharge-for-value" defence. Under New York law, a creditor does not have to return mistakenly paid funds that discharged a debt owed to them if the creditor (i) was unaware and did not have notice (which could include constructive as well as actual notice) of the mistake at the