When "Six Eyes" Just Aren't Enough

On February 16, 2021, the United States District Court in the Southern District of New York (the "Court") issued a decision In Re Citibank August 11, 2020 Wire Transfers¹ that upheld the "discharge for value" doctrine and ruled that certain lenders (the "Defendants") were entitled to retain funds erroneously sent by the administrative agent (the "Plaintiff") under a credit facility to which the Defendants were a party.  The decision largely relied upon the application of the facts in this case to precedent established in a 1991 New York Court of Appeals case (Banque Worms v. BankAmerica International)² involving a mistaken wire transfer of $2 million. 

Background

Defendants and other lenders were party to a $1.8 billion dollar syndicated loan originated in 2016 (the "2016 Term Loan"). On August 11, 2020, five lenders (the "Roll Up Lenders") under the 2016 Term Loan exercised their rights under the 2016 Term Loan documents to exchange their positions in the 2016