Citigroup’s $1.2b Revlon blunder ends with case dismissal after bank’s victory

NEW YORK – A hard-fought battle between Citigroup and creditors of Revlon over an epic blunder, in which the bank accidentally sent the lenders more than US$900 million (S$1.2 billion), was finally capped with a legal pronouncement: Case dismissed.

The order of dismissal came on Monday after the last holdouts among the lenders agreed to return their share of US$504 million that the creditors still had after Citigroup’s victory in court. That sum was part of the original errant payment of over US$900 million, some of which had already been voluntarily returned to the bank by other recipients.

“Any pending motions are moot,” United States District Judge Jesse Furman wrote in the order of dismissal. “All conferences are cancelled. The Clerk of Court is directed to close the case.”

It is an ordinary document closing an extraordinary case, in which the bank sued the creditors – including Brigade Capital Management, HPS Investment Partners and Symphony Asset Management – for the return of the funds. Citigroup had mistakenly transferred them in August 2020 while trying to make an interest payment as an administrative agent on a loan, a blunder that became the talk of Wall Street. 

In February 2021, the lenders won a surprise trial court decision saying that they did not have to return the money. The judge said the creditors should not have been expected to know that the transfer was an error. Then, three months ago, a federal appeals court overturned the trial court’s decision. It was a major victory for Citigroup’s main banking unit in its efforts to redeem the embarrassing lapse, which had forced the bank to explain to regulators how such a failure was possible.

Citigroup declined to comment on the case’s conclusion on Monday. Lawyers from Quinn Emanuel representing the lenders, and representatives for Brigade and Symphony, also declined to comment. HPS did not immediately respond to a request for comment.

Even after Citigroup’s victory at the appeals court, the funds still had to be returned. On Dec 5, the bank and the lenders told Judge Furman that three of the defendants were prepared to sign an agreement ending the litigation, while there had been “substantial progress” in talks with the others. Last Friday, they told the judge that all 10 of the creditors had signed an agreement to send back the money.

There is still a chance that the Dickensian case has some life left in it. In his order on Monday, Judge Furman gave the parties 60 days to reopen the action “if the settlement is not consummated”. BLOOMBERG