Citibank, N.A. v. Brigade Capital Management, LP
United States Court of Appeals for the Second Circuit
49 F.4th 42 (2022)
- Written by Eric Miller, JD
Facts
Revlon, Inc., took out a loan of $1.8 billion. Citibank N.A. (plaintiff) acted as the administration agent for the various lenders. Revlon’s financial position deteriorated, making it increasingly unable to pay back the outstanding balance. Three years before the repayment due date, a computer error caused Citibank to pay the entire outstanding amount of Revlon’s loan—$894 million in principal and $7.8 million in interest—to the loan managers for the lenders. Citibank sent recall notices explaining the error and was able to recover $385 million. This left approximately $500 million, the recipients of which—including Brigade Capital Management, LP (Brigade) and other loan managers (defendants)—refused to return the funds. Citibank brought suit against those loan managers in federal district court. The court applied the discharge-for-value rule, holding that the lenders were entitled to keep the money because it amounted to the repayment of an actual debt. Citibank appealed to the United States Court of Appeals for the Second Circuit.
Rule of Law
Issue
Holding and Reasoning (Leval, J.)
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