The Citigroup (NYSE:C) mistaken-payment saga continued to develop on Wednesday, as the big lender filed two new lawsuits in the dispute, managing to get the amounts at issue frozen. The targets are HPS Investment Partners and Symphony Asset Management, both of which are refusing to return their portions of the $900 million Citigroup paid them last week.
Citigroup's massive payment was the result of a human error, according to the bank. It occurred one day after a clutch of companies that combined to provide a $1.8 billion loan to troubled Revlon (NYSE:REV) sued the cosmetics company over that facility. HPS and Symphony are among those creditors; the agent for the loan, provided in 2016, was Citigroup.
Due to the mistake, HPS received $127.3 million from the bank, and Symphony got $109.7 million. A third Revlon creditor, Brigade Capital Management, was wired $175 million. On Tuesday, Citigroup filed its first lawsuit related to the erroneous payments against Brigade in federal district court; its request for that $175 million to be frozen pending a Brigade appearance before the court was granted.
On Wednesday, the monies transferred to HPS and Symphony were also frozen.
Benjamin Finestone, a lawyer representing both HPS and Brigade, said the two companies don't believe the payments were in error. Instead, they seemed to be a "full payoff" of the amounts loaned to Revlon. The bank was quoted in The Wall Street Journal as saying that "[s]ome of the best evidence is that not every lender who received an erroneous payment pocketed the money." So far, it has recouped about half of what it paid out.
Despite the worsening dispute, Citigroup's stock fell less precipitously than the wider stock market on Wednesday, closing only 0.1% lower.