Citigroup Creditors Seek to End Freeze on Mistaken Transfers

A group of asset managers for Revlon Inc. lenders urged a judge not to extend a freeze on more than $500 million that they accidentally received from Citigroup Inc. while the bank appeals a ruling that they don’t have to return it.

Citibank sought the freeze because it’s upset that the lenders received a “lottery-like windfall,” the group said in a court filing in Manhattan Friday.

“They did not” get a windfall, the group said. “The lenders received exactly what they were owed.” They said they’re now entitled to use the money as they see fit.

U.S. District Court Judge Jesse Furman last month rejected the bank’s attempt to recover the $504 million it accidentally sent to asset managers for Revlon lenders. They include Brigade Capital Management, HPS Investment Partners and Symphony Asset Management.

The bank has since appealed the ruling, seeking a freeze on the funds during the process, arguing that the lenders might send the money to investors around the world, making it difficult, if not impossible, to trace.

A current freeze remains place until Furman rules on the bank’s and lenders’ requests.|

Citigroup restated its fourth-quarter results last month after writing down a portion of the loan to Revlon it now owns. The bank was trying to send a periodic interest payment to a group of Revlon’s lenders in August when instead it transferred an amount equal to the full principal of the loan plus interest.

The case is In re Citibank August 11, 2020 Wire Transfers, 20-cv-6539, U.S. District Court, Southern District of New York (Manhattan).

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