Case For $176m Payment Made By Accident Filed By Citibank

A federal court in the United States has been approached by the US banking giant Citigroup seeking an order to force the hedge fund Brigade Capital to return about $176m that had been “mistakenly” given by the lender.

The money demanded is a part of a total of $900m that had been accidentally transferred to creditors of the struggling cosmetics company Revlon by the bank.

It meant to send Brigade just $1.5m to cover interest on a loan the hedge fund holds, the bank says.

That mistaken payout of the huge amount was blamed on an “operational mistake” by Citigroup.

The accidental payout occurred while the bank was trying to make interest payments on behalf of Revlon but had transferred amounts that were 100 times of hat it had intended to, Citigroup said in a filing to the Southern District of New York Court.

“When Citibank discovered the mistake, it promptly asked the recipients to return its money,” America’s third-largest bank said in the filing.

When the accidental wiring of roughly $900m to the lenders’ last week interest, Citigroup was preparing to step down as the administrative agent for the Revlon, at a time when there was a bitter tussle between the cosmetics company and its creditors.

While money has been returned to Citigroup by some of those creditors that had received the over-payments, there are some others, including Brigade, who have not yet paid back any additional money that had been paid to them.

According to the complaint, Brigade was supposed to receive interest on a $174.7m loan.

Citigroup said that Brigade has instead been given a total of $176.2m and the firm has since refused to repay the money “despite crystal-clear evidence that the payments were made in error”. Citigroup also noted the money lying with Brigade s the property of the bank and not of Revlon.

The novel coronavirus pandemic has hit Revlon hard and one of its creditors that have filed a case against the company over its debt restructuring plans includes Brigade.

No comments on the issue were available in the media from Citigroup and Brigade.

Analysts have noted another layer to this entire incident. Revlon is already being sued by another bank that is acting on behalf of Brigade and other creditors. In the law suit, Revlon has been accused of stealing, according to the to court documents reported by the media, of collateral security used for the loans.

That implies that the creditors of Revlon could not use the assets of the company such as its brands, to get back any of the shortfalls in the repayment of the loans taken by Revlon.

An in those court cases, Citibank has also been named as one of the defendants in addition to Revlon. The law suit accuses Citigroup of gross negligence and willful misconduct. A New York court was asked to declare the loan “due and payable” by the creditors. .

But the creditors, including Brigade, have claimed that the additional money given to them by Citigroup was something that they are legally entitled to.

(Adapted from

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