Wednesday, February 17, 2021

A $900 Million Banking Blunder

In August 2020, Citibank, as administrative agent for a syndicated loan to Revlon, Inc., accidently wired nearly $900 million to lenders.  It had intended to send a $7.8 million interest payment.  Some of the lenders refused to return the money.  Not surprisingly, Citibank was not happy about this.  Yesterday, U.S. District Judge Jesse M. Furman issued a ruling denying Citibank's attempt to recoup the funds.  As it turns out, under NY law, keeping money wired by mistake generally amounts to conversion or unjust enrichment. However, under the discharge-for-value defense, “The recipient is allowed to keep the funds if they discharge a valid debt, the recipient made no misrepresentations to induce the payment, and the recipient did not have notice of the mistake.”  

Here's coverage of the ruling in the NY Times, WSJ, and Reuters.

https://lawprofessors.typepad.com/business_law/2021/02/a-900-million-banking-blunder-.html

Colleen Baker, Financial Markets | Permalink

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