Private Law Theory

ABSTRACT
This Article argues that the Second Circuit’s present-entitlement holding and the concurrence’s setoff argument in Citibank v Brigade Capital do not reflect the state of the law and risk introducing confusion into an already convoluted area of law. First, I will briefly review the district court’s decision in Citibank and its reception among scholars and the marketplace. Next, I will examine the Second Circuit’s opinion, as well as the concurrence and the addendum to the opinion. Finally, I will critique the ‘present entitlement’ requirement that the court grafted onto the discharge-for-value defense. In this critique, I will argue that the requirement lacks a historical basis, cannot be justified on the grounds proffered by the concurrence, contravenes existing case law, and risks undercutting the rationale for the rule. Consequently, I will argue that the court’s ‘present entitlement’ requirement should be rejected.

Layne S Keele, To Err is Human, to Restore is (Usually) the Law: Present Entitlement in Restitution’s Discharge-For-Value Rule, 77 Arkansas Law Review (2024).