Citi Resigns Role on Brigade CLO Deal Amid Escalating Loan Feud
(Bloomberg) -- Citigroup Inc. resigned as lead arranger for a collateralized loan obligation managed by Brigade Capital Management amid an escalating legal dispute between the two sides over an errant loan payment.
The bank stepped down from its role on Brigade’s $400 million Battalion XVIII CLO transaction, which was due to price Wednesday. It sent a notice of termination to the firm Tuesday, citing failure of certain conditions set forth in its engagement letter, according to documents seen by Bloomberg News.
A representative for Brigade declined to comment. A spokeswoman for Citigroup confirmed the resignation but declined to comment further.
The resignation signals an escalation of the feud between Citigroup and Brigade that wound up in court on Monday. It surrounds a $900 million payment Citigroup accidentally made to lenders to Revlon Inc. amid a bitter fight between the cosmetics company and its creditors. While some lenders opted to return the funds to Citigroup, others including Brigade at least initially refused to give the money back. Citigroup won a temporary court order Tuesday freezing the $175 million of funds Brigade is refusing to return.
Brigade and other parties on the CLO are working on finding a replacement to Citigroup, according to a person with knowledge of the matter, who asked not to be identified discussing a private transaction.
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