A federal judge denied Citigroup’s efforts to recoup roughly $500 million of its own money that it accidentally paid out to Revlon lenders, with the judge ruling that the recipients can keep the payments, per the Wall Street Journal.
On Aug. 11 of last year, U.S. District Judge Jesse Furman in Manhattan wrote in his opinion that the money wired was “final and complete transactions, not subject to revocation.”
Citigroup, which was acting as Revlon’s loan agent, sent $893 million to Revlon’s lenders, seemingly paying off the makeup company’s debt that wasn’t due until 2023. Citi had meant to wire a $7.8 million interest payment, ultimately blaming the mistake on human error.
Some of the lenders gave back roughly $400 million, but 10 asset managers declined, which led to Citigroup’s lawsuit in which it sought to recover an estimated $501 million. Citi said that the lenders should return the money because they knew it was an accident, and that Revlon couldn’t afford the payment.
Judge Furman sided with the lenders, saying they “believed, and were justified in believing, that the payments were intentional.” He continued, “To believe otherwise—to believe that Citibank, one of the most sophisticated financial institutions in the world, had made a mistake that had never happened before, to the tune of nearly $1 billion—would have been borderline irrational.”
Citi issued a statement, saying it “strongly” disagreed with the judge’s decision and that it will appeal. “We believe we are entitled to the funds and will continue to pursue a complete recovery of them.”
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