Debt

Citibank Files Suit For $176M Payment Made By Mistake

Citigroup Inc. has asked a federal judge to order Brigade Capital Management LP to return $176 million accidentally paid to the New York-based global investment firm.

The BBC reported the lawsuit, filed in the Southern District of New York Court, said Citigroup intended to send Brigade $1.5 million to cover interest payments on behalf of Revlon on a loan the hedge fund holds. But it transferred amounts more than 100 times the size intended.

Brigade received $176.2 million and has refused to repay the funds “despite crystal-clear evidence that the payments were made in error,” according to the complaint. Citigroup said the money belongs to the bank, not Revlon.

“When Citibank discovered the mistake, it promptly asked the recipients to return its money,” according to the complaint.

Last week, Bloomberg News reported Citigroup paid nearly $900 million by mistake to Revlon’s lenders due to a clerical error and wants its money back.

While some returned the cash, others, including Brigade, refused, sources told the news service.

Lawyers for the lenders who sued Revlon were surprised to learn they had been already repaid the loan issued in 2016. Citibank requested a return of the cash, saying it was paid inadvertently due to an “operational error.”

Revlon is in the midst of a legal fight with some of its lenders. A lawsuit was filed last week in U.S. District Court in New York. It accused Revlon of moving assets beyond the reach of lenders to use them as collateral for other creditors. The complaint alleged the cosmetics company violated its loan agreements by siphoning off intellectual property including those for American Crew, Elizabeth Arden, Almay and other brands, transferring them to subsidiaries.

At the same time, Revlon has been fighting with Brigade, HPS Investment Partners LLC and Symphony Asset Management, the lenders holding the loan.

“This group of lenders has repeatedly resorted to baseless accusations in an attempt to enrich themselves and hurt the company by blocking Revlon from exercising its contractual rights to secure the financing necessary to execute our turnaround strategy and navigate the COVID-19 crisis,” Revlon said in an earlier statement.

Revlon, saddled with nearly $3 billion of debt, has been hurt by the pandemic and is seeking to rework its borrowings.

——————————

NEW PYMNTS STUDY: LEVERAGING THE DIGITAL BANKING SHIFT – SEPTEMBER 2020  

The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

TRENDING RIGHT NOW