Commercial Banking, Collections, and Bankruptcy

Plaintiff filed a lawsuit against defendant seeking damages after funds from two wire transfers were redirected by a third party into an account that the defendant had previously flagged as suspicious. Plaintiff asserted two claims under the Indiana Uniform Commercial Code as well as a common law negligence claim. The district court dismissed the statutory claims for lack of privity between the parties and dismissed the negligence claim as being preempted by statute. The Seventh Circuit affirmed dismissal of the statutory claims, finding that the statute did not establish an independent remedy but reversed dismissal of the negligence claim by finding that to the extent that the claim arose from the issuance of funds after defendant deposited them into the suspicious account, the claim was not preempted. (JACKSON-AKIWUMI and LEE, concurring).

In a bankruptcy matter, the appellant-lender argued a district court order affirming the findings of the bankruptcy judge regarding insolvency should be reversed by arguing that the balance-sheet test was the sole legally permissible approach to defining solvency. The Seventh Circuit affirmed, finding that the lender’s argument on appeal was inconsistent with Illinois’ adoption of the Uniform Fraudulent Transfer Act, which allows for multiple ways in which a business can be insolvent, and that the lender had forfeited the argument by raising it for the first time on appeal. (JACKSON-AKIWUMI and LEE, concurring)