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Citigroup Granted Freeze of Funds Erroneously Sent to Revlon Creditors

By Eric Volkman - Aug 18, 2020 at 10:38PM

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The plot thickens in an oddball story of a big banking mistake.

Citigroup (C -0.39%) might just get back all of the nearly $900 million it mistakenly sent to a clutch of Revlon (REV -0.36%) creditors, some of whom are refusing to return the money.

Citigroup sued one of those parties, Brigade Capital Management -- a company that operates a group of funds that are among the creditors -- to force it to return its funds' share of the money. U.S. District Judge Jesse Furman granted the bank's request to freeze the $175 million at issue.

Stacks of $100 bills.

Image source: Getty Images.

Brigade is still refusing to pay back the money. Robert Loigman, a lawyer who represents Brigade, was quoted by Reuters as saying, "[T]o target Brigade as if they were the lender here, it just doesn't work and it doesn't make sense with respect to the type of relief [Citigroup is] seeking."

Citigroup's side disagrees. Matthew Ingber, a lawyer who represents the lender, said that "[w]e think it creates serious issues for the banking industry if players like Brigade can understand, by all accounts, that this was unintentional, that this was a mistake, and can reap a windfall from it."

A court date has been set for later this month at which Brigade will present its case for not returning the funds. Until then, however, it cannot move or spend the money, according to Judge Furman's orders.

Last week, it came to light that Citigroup -- through what it described as a clerical error -- wired the money to numerous Revlon creditors. This happened a day after three of those entities, including Brigade and several other creditors, sued Revlon over a $1.8 billion loan they provided to the heavily indebted cosmetics company in 2016. Citigroup was the administrative agent on the loan.

 

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Citigroup Inc. Stock Quote
Citigroup Inc.
C
$53.55 (-0.39%) $0.21
Revlon, Inc. Stock Quote
Revlon, Inc.
REV
$8.33 (-0.36%) $0.03

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