October 13, 2022 - The United States Court of Appeals for the Second Circuit (“2nd Circuit”) this week denied two motions filed by the defendants in the Revlon mistaken payments case requesting either a rehearing of the case by the panel that decided the case or “en banc” review by all the 2nd Circuit judges. As we previously reported, in early September a three-judge panel of the 2nd Circuit unanimously reversed a decision of the New York District Court that would have permitted the defendants to keep the $500MM mistaken payment made by Citibank based on the doctrine of “discharge for payment”. The defendants’ only remaining recourse is to request certiorari review by the United States Supreme Court, but most observers believe such a request would not be granted (and that, consequently, the defendants are unlikely to go down that path).
Takeaways. On the macro level, and as we noted in a recent webinar (a replay of which is available here), the 2nd Circuit’s decision, coupled with standard protective credit agreement provisions developed by the LSTA would likely settle the issue of mistaken payments in the loan market. With respect to the defendants vis a vis their original exposure to the underlying Revlon loan, the battle moves to the bankruptcy court that is presiding over the Revlon bankruptcy filing.
