Citigroup in talks to recover $500 million Revlon loan payment

© Reuters.

By Jonathan Stempel

NEW YORK (Reuters) – Citigroup Inc is in talks to return about $500 million it mistakenly paid to a group of hedge funds and investment firms for a loan made by Revlon Inc, the now-bankrupt cosmetics company property controlled by billionaire Ronald Perelman.

In a filing in Manhattan federal court on Thursday, lawyers for the bank and lenders said they were discussing a “consensus solution” to terminate Citigroup (NYSE:) sued in August 2020 to reclaim the mistaken payment.

Although no settlement was reached, the lawyers said the “substantial provisions” of the settlement would cover the return of Citigroup’s funds, with the bank transferring interest and amortization payments. which they begin receiving in early 2021.

Negotiations to close the case were revealed on November 10. The attorneys asked U.S. District Judge Jesse Furman to allow them to update their status by December 5.

Citigroup, Revlon’s loan agent, accidentally used its own money in August 2020 to pay off the company’s $894 million loan three years early instead of paying $7.8 million in interest.

The bank blamed human error and some of the recipients returned their payments.

But 10 asset management firms including Brigade Capital Management, HPS Investment Partners and Symphony Asset Management declined, saying the bank paid what they owed.

Furman sided with them in February 2021, causing Citigroup to reduce previously reported profits to reflect $390 million in additional legal costs.

But a federal appeals court in Manhattan overturned that ruling in September, saying it would subject the group to a “big headwind” at Citigroup’s expense.

Revlon filed for Chapter 11 bankruptcy protection on June 15.

The case is In re Citibank August 11, 2020 Bank transfer, United States District Court, Southern District of New York, No. 20-06539.

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