CITIBANK, N.A., Plaintiff-Appellant, v. BRIGADE CAPITAL MANAGEMENT, LP, HPS INVESTMENT PARTNERS, LLC, SYMPHONY ASSET MANAGEMENT LLC, BARDIN HILL LOAN MANAGEMENT LLC, GREYWOLF LOAN MANAGEMENT LP, ZAIS GROUP LLC, ALLSTATE INVESTMENT MANAGEMENT COMPANY, MEDALIST PARTNERS CORPORATE FINANCE LLC, TALL TREE INVESTMENT MANAGEMENT LLC, NEW GENERATION ADVISORS LLC, Defendant-Appellees, INVESTCORP CREDIT MANAGEMENT US LLC, HIGHLAND CAPITAL MANAGEMENT FUND ADVISORS LP, Defendants., 49 F.4th 42

Summary

HOLDINGS: [1]-In a case in which plaintiff mistakenly transmitted the full amount of the debtor's outstanding principal balance, three years before its loan repayment was due, and plaintiff brought an action for restitution when defendants refused to return the portion representing the principal, the district court erred in deciding that defendants were not obligated to return the money because the discharge-for-value rule did not shield defendants, beneficiaries of the mistaken transfer, from claims for restitution as they were on inquiry notice of the mistake as the facts of the transfer exhibited red warning flags that would have caused a reasonably prudent person who faced an avoidable risk of loss to make reasonable inquiry as to whether the transfer resulted from mistake; and a reasonable inquiry would have revealed the mistake.