Citigroup wins freeze on funds mistakenly despatched to Revlon creditors

Citigroup wins freeze on funds mistakenly despatched to Revlon creditors

© Reuters. The Citigroup Inc logo is seen at the SIBOS banking and financial conference in Toronto© Reuters. The Citigroup Inc keep is viewed on the SIBOS banking and monetary conference in Toronto

By Imani Moise

(Reuters) – Citigroup Inc (N:) won a little victory on Tuesday in its fight to recoup nearly $900 million it mistakenly despatched to creditors of anxious cosmetics company Revlon Inc (N:).

A U.S. assume blocked a hedge fund from doing anything with its nearly $175 million half of the payout whereas he considers a preliminary injunction that can well in the atomize require the agency to repay Citigroup.

In a mighty blunder, Citigroup closing week erroneously repaid a virtually $900 million loan made to Revlon, a day after lenders sued the cosmetic company over its restructuring tactics.

Citi quickly caught the fee error and became once taking steps to net neatly the funds, the bank has said.

Citi had been performing as agent on the loan, that technique it aloof payments from Revlon to distribute to the creditors, but the unintended fee came from the bank’s own funds.

The error has drawn scrutiny from regulators who indulge in begun having a see into the loan and raised questions concerning the bank’s operational resiliency.

The regulatory fallout of the error is probably going to be drawn out, very long time banking analyst Dick Bove from Odeon Capital Group said in a learn ticket.

“A fee error by the nation’s greatest truly world bank is probably going to cause necessary questions pertaining to the

systems the bank is utilizing,” he said.

Brigade Capital Administration LP, which obtained $175 million from the fee, has to this point refused to give the cash assist. Citigroup wired the cash to 43 Brigade funds because they had been Revlon’s lenders, in preference to Brigade itself.

“To goal Brigade as in the event that they had been the lender right here, it honest would no longer work and it would no longer originate sense with admire to the form of reduction they’re in quest of,” said Robert Loigman, a felony reliable representing Brigade.

An felony reliable for Citigroup asserted that as supervisor of the funds, Brigade has the strength to return the cash to the bank, and that if a assume solutions the hedge fund can serve the funds it would possibly perhaps well accomplish unhealthy precedent.

“We assume it creates serious elements for the banking commerce If gamers like Brigade can realize, by all accounts, that this became once unintentional, that this became once a mistake, and would possibly perhaps reap a windfall from it,” said Matthew Ingber, who represents Citi.

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