Judge Stops $ 175 Million Revlon Loan Payment For Citi
Citi wired $ 900 million owed by Revlon to various lenders who fell out with Revlon over its debt restructuring strategies. Brigade claimed she did not have to return the $ 175 million, which was her share of the $ 900 million loan payment, the WSJ reported.
But the Manhattan U.S. District Judge Jesse furman said the opposite, ruling that Brigade is not allowed to withdraw, transfer or do anything else with the money, according to the WSJ. Citi said the payment was an error, made in error on the bank’s own funds.
Citi requested the refund, but this was refused by Brigade Capital, who said they did not know if the payment was in fact in error. The lawyer of the brigade, Robert loigman, stated that the payments could be presumed correct, as they corresponded to the exact amounts owed by Revlon. He said it was “not credible that a sophisticated institution like Citibank could have transferred nearly $ 1 billion, in the exact amount outstanding under the 2016 credit agreement, by mistake”, according to the WSJ.
Citi countered that Brigade must have known the payment was in error because Revlon didn’t have nearly $ 900 million on hand. The company had $ 415.7 million in cash as of June 30, the WSJ reported.
Other investors also held onto the money, using whatever logic was originally theirs, and they are not required to lend to Revlon again after being repaid, according to the WSJ.
Citi claimed that it intended to send several months of interest to lenders, but actually paid on average more than 100 times what it initially expected, due to issues with the bank’s loan processing system, according to the WSJ. But the payments were a boon to lenders, paying off loans that were not yet due. Loans had changed hands at less than 30 cents on the dollar last week.