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Citigroup v Brigade Capital Management: Difference between revisions
Citigroup v Brigade Capital Management (view source)
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{{a|casenote|{{stupidbanker}}}}A judgment that | {{a|casenote|{{stupidbanker}}}}+++UPDATE+++ UPDATE+++The decision was reversed on appeal on September 8 2022+++ | ||
A judgment that surely struck terror into earnest hearts in the [[Trust and agency professional|global trust and agency community]], the US District Court’s [https://int.nyt.com/data/documenttools/ruling-on-citi-s-900-million-transfer-to-revlon-lenders/5f57c39ebdb6e58c/full.pdf stonking 105-page judgment] in the {{casenote|Citigroup|Brigade Capital Management}} addresses a perfect storm of unexpected factors to come to quite the eye-catching — well, eye-''watering'', at any rate — conclusion. | |||
Headline: Citigroup, who as Revlon’s [[loan servicing agent]], accidentally paid half a billion dollars of principal to lenders when it only meant to pay $8m of interest, ''couldn’t have its money back''. | Headline: Citigroup, who as Revlon’s [[loan servicing agent]], accidentally paid half a billion dollars of principal to lenders when it only meant to pay $8m of interest, ''couldn’t have its money back''. | ||
Happily — and in the [[JC]]’s entirely inconsequential opinion, rightly — the New York Appeals Circuit overturned Mr. Justice Furman’s first-instance decision on 8 September 2022. The next section is the JC’s (again, entirely inconsequential but, dammit, ''correct'') assessment of the first instance decision: | |||
==First Instance decision of Furman J== | |||
This case has ''everything'': it is as if all the ghastly phantoms of commercial legal practice converged in some mountain eyrie for a satanic feast on the bones of a poor, harmless, well-meaning global banking conglomerate. The [[JC]] liked it so much he has formulated a new equitable principle: ''[[durum caseum per magnos canibus]]'': “hard cheese for big dogs”: a sort of dark inversion of the [[JC]]’s ''[[anus matronae parvae malas leges faciunt]]''<ref>“[[little old ladies make bad law]]”</ref> principle. | This case has ''everything'': it is as if all the ghastly phantoms of commercial legal practice converged in some mountain eyrie for a satanic feast on the bones of a poor, harmless, well-meaning global banking conglomerate. The [[JC]] liked it so much he has formulated a new equitable principle: ''[[durum caseum per magnos canibus]]'': “hard cheese for big dogs”: a sort of dark inversion of the [[JC]]’s ''[[anus matronae parvae malas leges faciunt]]''<ref>“[[little old ladies make bad law]]”</ref> principle. | ||
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We might suppose that Citi has somehow assumed the lenders’ claims, then. But has it? This does not seem to be what it has done at all. It has ''repaid'' those loans, unasked, on Revlon’s behalf. Revlon neither agreed to it doing this, nor provided any [[consideration]] for it. | We might suppose that Citi has somehow assumed the lenders’ claims, then. But has it? This does not seem to be what it has done at all. It has ''repaid'' those loans, unasked, on Revlon’s behalf. Revlon neither agreed to it doing this, nor provided any [[consideration]] for it. | ||
==The Appeal == | |||
The | |||
===Real world effects=== | ===Real world effects=== | ||
Leaving the legal conundrums aside, this cleaves to a few interesting management observations, and themes dear to the JC’s heart: | Leaving the legal conundrums aside, this cleaves to a few interesting management observations, and themes dear to the JC’s heart: | ||