US banking giant Citibank has asked a federal court to force the Brigade Capital hedge fund to return $ 175 million. The money is part of the $ 900 million that the bank accidentally sent to creditors at cosmetics company Revlon. This was reported by CNN Bussiness.
The bank reclaimed less than half the money, which they attributed to a typo. Some of the lenders refuse to repay it, including three companies that claimed Revlon was behind on a loan and should have paid it back anyway, according to people aware of the matter.
In a lawsuit filed in New York Citigroup, which is responsible for the loan, said it intends to make interest payments on Revlon’s behalf. but accidentally transferred amounts more than 100 times larger.
Brigade should receive interest of $ 1.5 million on the principal amount of the loan of $ 174.7 million, according to the complaint.. Instead, $ 176.2 million was raised and the funds were denied repayment. “despite clear evidence that the payments were incorrectly made”, Citigroup said.
New York District Judge Jesse Furman scheduled a conference call Tuesday morning to discuss Citigroup’s request for an injunction.
Citigroup blames the accidental overpayment for an “operational error”.
“When Citibank discovered the mistake, it was quickly possible to ask the recipients to return their money,” said the third-largest bank in the US when filing.
Citigroup was preparing to resign as managing agent for the Revlon loan when it inadvertently sent around $ 900 million to lenders. last week amid a bitter battle between the cosmetics company and its creditors.
Brigade had borrowed money from Revlon and the incorrect payment covered the outstanding amount, although that does not mean that the brigade was necessarily entitled to receive it now. It was just an interest payment in a much smaller amount than Citibank wanted to make on Revlon’s behalf.
Corlonavirus affects Revlon
Revlon has been hard hit by the coronavirus pandemic, and Brigade is one of the creditors suing the company over its debt rescheduling plans.
The August 11 payment came just before Brigade and other lenders, including HPS Investment Partners and Symphony Asset Management, sued Revlon for its debt restructuring tactics. The loan is trading at less than 30 cents against the dollar, indicating that under normal circumstances, investors have little hope of a full recovery.
A representative for Revlon said the company had not canceled the loan or any part of it. Citigroup said in its lawsuit that the payment was made from its own resources, not Revlon’s funds.
Citigroup denied Brigade’s claim that the money should be treated as loan repayment.
brigade “I should have known that a surprising repayment of the capital was not possible under the current loan agreement.”Citigroup said. “”And he was aware that virtually no company, let alone a flagging consumer and retail company like Revlon, would ever make such a substantial refund while dealing with the significant financial repercussions caused by the ongoing pandemic. ” Citibank described Brigade Capital’s behavior as “excessive “ and they seek help in court.
Send crypto to the wrong address
In the world of cryptocurrencies, such situations were not far from reality as the crypto market has experienced similar moments that have left a lot of discomfort. Once a cryptocurrency transaction has been initiated and the blockchain network has been confirmed and loaded, the transaction can no longer be canceled or changed.
Crypto users on various forums regret sending money to the wrong address. Like a Bitcointalk user who allegedly lost $ 1,400 or a similar case in 2014 when another user sent 800 bitcoins to the wrong address, this story only had a happy ending, unlike the previous point.
However, due to the irreversible nature of digital currency protocols, we recommend always checking that you are sending the correct cryptocurrency to the correct address. For now, it remains to be seen whether Citibank’s legal conflict will end in a happy ending.