The US Citigroup Inc is negotiating the repayment of around $500 million it paid to a collection of hedge funds and investment companies in error on a debt owed by Revlon Inc, the now-bankrupt cosmetics company headed by billionaire Ronald Perelman.
Lawyers for the bank and the lenders said in a Thursday filing in Manhattan federal court that they had been considering a “consensual agreement” to stop Citigroup's August 2020 lawsuit to reclaim the incorrect payment.
While no deal has been reached, the attorneys stated that the “material parameters” of a settlement would include the return of Citigroup's funds, with the bank surrendering interest and amortization payments it began receiving in early 2021.
On November 10, talks to settle the case were revealed. The lawyers requested that US District Judge Jesse Furman allow them to update the situation by December 5.
Citigroup, Revlon's loan agent, had inadvertently used its own money to pay off the company's $894 million loan three years early in August 2020, instead of paying $7.8 million in interest.
The bank cited human error, and several recipients had their funds refunded.
However, ten asset managers, including Brigade Capital Management, HPS Investment Partners, and Symphony Asset Management, refused, claiming that the bank had paid them in full.
Furman sided with them in February 2021, causing Citigroup to decrease previously stated earnings by $390 million to reflect the additional legal expenditures.
However, in September, a federal appeals court in Manhattan overruled that judgment, saying it would result in the group receiving a “huge windfall” at the cost of Citigroup.
On June 15, Revlon filed for Chapter 11 bankruptcy protection.
In re Citibank August 11, 2020 Wire Transfers, No. 20-06539, U.S. District Court, Southern District of New York.
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