Citigroup Inc. paid nearly $900 million by mistake to Revlon Inc. lenders due to a clerical error and wants its money back, Bloomberg News reported.
While some of Revlon’s lenders returned the cash, others are refusing to return the money to Citi after they received funds from the bank equal to the amount of a Revlon loan plus interest, sources told the news service.
Lenders who sued Revlon were surprised to learn Thursday (Aug. 13) they had been fully repaid on a loan issued in 2016, the sources said. Citi executives asked for the money back, saying it was paid inadvertently due to an operational error, sources said.
Revlon is involved in a legal dispute with some of its lenders. A lawsuit filed Wednesday in U.S. District Court in New York accused Revlon of moving valuable brand assets beyond the reach of lenders in order to use them as collateral for other creditors. The complaint alleged the cosmetics company had broken its loan agreements by siphoning off intellectual property including those for American Crew, Elizabeth Arden, Almay and other brands, transferring them to subsidiaries as collateral.
Citi and Revlon declined to comment.
Revlon has been fighting with Brigade Capital Management LP, 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.
Last month, a surge in fixed-income trading revenue helped Citi turn a profit during the second quarter (Q2), despite credit losses and weakness in its consumer banking division.
Citigroup reported a 68 percent jump in fixed-income trading revenues for Q2, which beat analyst estimates for earnings and revenue.
The big increase in fixed-income trading revenue, combined with a rise as well in investment banking activity, pushed Citi’s revenue for the quarter 5 percent higher to $19.8 billion, up from $18.8 billion during the same period a year ago.
Still, Citi’s Global Consumer Banking division took a 10 percent hit in revenue, falling to $7.3 billion in Q2, down from $8.1 billion in the same period a year ago.
Net credit losses surged 12 percent to $2.2 billion for the quarter, with Citi reporting it had provided some form of relief or adjustment to 2 million credit card holders.