Even though the Second Circuit restored a sense of normalcy to the syndicated loan market by ordering the lenders to return mistaken payments to Citibank in the infamous Revlon case, the erroneous payment provision (or Revlon blocker as it has become commonly known) is here to stay.

Although the Revlon case had no direct bearing outside of the jurisdiction of New York, the case served as a wake-up call for the entire loan market. Prior to the decision, no financial institution expected that it could permanently lose billions of dollars simply by entering mistaken wire instructions. Since the Revlon decision, erroneous payment provisions have been developed by industry groups such as the LSTA and by individualized lending institutions. These provisions are now included in credit agreements and are intended to protect administrative agents against potential liabilities from any payments made in error.

While it is rare for an erroneous payment provision to be rejected by the borrower or any lender entirely, the contours of these provisions may be negotiated and counsel for lenders and borrowers should review these terms carefully to ensure that they do not overreach. For instance, accrual of interest on erroneous payments may be resisted, the language relating to preservation of a borrower's obligation to pay in an erroneous payment scenario may be scaled back or removed entirely, or the deadline for the administrative agent to notify lenders of an erroneous payment could be required.

Listen as our authoritative panel discusses the background and consequences of the Revlon case and its lasting impact on credit agreements. The panel will review common features of erroneous payment provisions and things to look out for whether your client is a borrower, lender, or administrative agent.

Outline

1. Overview of erroneous payment provisions
2. Implications of the Revlon case
3. Common features of current erroneous payment provisions
   1. LSTA's model erroneous payment provision
   2. Example provisions developed by individual lending institutions
4. Other provisions of a typical credit agreement implicated by Revlon
   1. Pro rata sharing of payments
   2. Indemnification
   3. Subrogation
   4. Ability to sell loans
5. Considerations for borrowers, lenders, and administrative agents when negotiating erroneous payment provisions
6. Key takeaways

Benefits

The panel will address these and other key issues:

• How did Revlon change the standard erroneous payment provisions in credit agreements?
• What are common features of erroneous payment provisions?
• What are the key considerations for borrowers, lenders, and administrative agents when negotiating erroneous payment provisions?
• What other provisions in credit agreements were implicated by the Revlon case?