Seventh Circuit Voids Lien-Securing Rescue Loan

A “bank [making a secured rescue loan] had information that should have created the requisite suspicion … to conduct a diligent search for possible dirt” — i.e., whether the debtor had the right to pledge $312 million of customer securities, held the U.S. Court of Appeals for the Seventh Circuit on Jan. 8, 2016 in In re Sentinel ManagementGroup, Inc. In this article, of counsel Michael L. Cook discusses the court’s decision, which reversed the district court, voided the defendant bank’s lien as a fraudulent transfer, and rejected the bank’s good-faith defense.