Judge Rules That Revlon Lenders Can Keep Citi’s Mistaken Repayment

A New York judgehas ruled, Revlon lenders Citigroup mistakenly repaid can keep the money.

The court decision, written by New York Southern District Court Judge Jesse Furman, shows that he ruled in favor of the 10 investment advisory firms Citi sued in August. The 10 defendants collectively received more than $500 million of the mistaken wire transfers in August, according to the judge, while other lenders returned the money and avoided the lawsuit.

“We strongly disagree with this decision and intend to appeal,” a Citi spokesperson said via email Tuesday. “We believe we are entitled to the funds and will continue to pursue a complete recovery of them.”

At the heart of the lawsuit is a “mistaken” repayment of a $900 million loan for cosmetics maker Revlon. Citi acted as the administrative and collateral agent for the loan, which means that it acted as an intermediary between Revlon and the lenders.

Citi said it intended to only pay the interest due on the loan, but instead repaid the loan in full. Revlon had not transferred that money to Citi.

“The resulting payments equaled — to the penny — the amounts of principal and interest that Revlon owed on the loan to its lenders,” Furman noted in his ruling, adding that Citi had made “one of the biggest blunders in banking history.”

After Citi made those accidental payments to the lenders, many held onto the money, first thinking it was an early repayment before Citi alerted them to the mistake. When those lenders continued to hold onto that money, Citi ended upfiling lawsuits againsteach of them.

In August, the firm sued Brigade Capital Management, Bardin Hill Loan Management, Investcorp Credit Management, Greywolf Loan Management, Zais Group, Allstate Investment Management, Medalist Partners Corporate Finance, Tall Tree Investment Management, New Generation Advisors, and Highland Capital Management Fund Advisors.

Highland Capitalhas already repaid the loan,亚博赞助欧冠previously reported. A spokesperson for the firm did not immediately respond an email seeking comment.

[IIDeep Dive:Four Lawsuits, 17 Companies, and $900 Million: The Story Behind Citi’s ‘Mistaken’ Loan Repayment]

According to Furman, the lenders were justified in believing that Citi’s repayment was intentional.

“Indeed, to believe otherwise — to believe that Citibank, one of the most sophisticated financial institutions in the world, had made a mistake that had never happened before, to the tune of nearly $1 billion — would have been borderline irrational,” he wrote.

According to Furman, the lenders have agreed to continue to hold off on using the money Citi repaid, in case Citi appeals the decision.