To Err is Human, to Restore is (Usually) the Law: Present Entitlement in Restitution’s Discharge-For-Value Rule

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.