Citigroup Inc. C won a $500 million recovery appeal that was accidentally sent to a group of people in 2020 Revlon Inc. rev Creditor.
What happened: In August 2020, Citi accidentally wired $900 million to a group of Revlon creditors. The actual operation was to send interest payments to Revlon creditors, but instead the bank sent a payment for the entire loan. Some creditors returned the erroneous sum of about $400 million, while others refused, citing “value relief.” reports Bloomberg.
This defense is based on a 1991 New York court ruling that said creditors can withhold erroneous payments as long as they do not know the money was sent in error.
Following the error, Citi sued creditors unwilling to repay the amounts, including brigade Capital Management LP, HPS Investment Partners LLC and Symphony Asset Management.
US District Judge in February 2021 Jesse Furman ruled in favor of the creditors and allowed them to keep the money (temporarily), on the back of the “discharge” plea mentioned above.
What’s next: Citi brought the matter before a federal appeals court presided over by three federal judges based in New York. The trio ruled in Citi’s favor Thursday, forcing the lenders to return the disputed funds to Citi.
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REV Price Promotion: Shares fell significantly after news of the ruling first broke Thursday afternoon, falling from $6.40 to $5.95. Shares rallied quickly to close Thursday’s trading session at $6.40, although still below the previous close of $6.68.
Photo: Beyond my Ken on Wikimedia Commons
