Citigroup accidentally wired $900 million to Revlon lenders, now it’s fighting to get it back
This is one mistake that will continue to haunt Citigroup for a long long time. It could even end up being among the top corporate snafus of all time. On Wednesday, loan operations staff at Citigroup New York branch wired $900 million to Revlon lenders. The amount is surprisingly equal to what Revlon owes its lenders. The wire transfer was made due to a “clerical error,” says Citigroup.
Citigroup is now putting together all its resources to get the money back. At the time of writing this article, Citigroup has managed to get back half the money.
But three of the Revlon lenders have refused to return it saying that Revlon was in default and should have repaid them anyway. Revlon Inc. the troubled cosmetics company owned by Ron Perelman owes nearly a billion dollars to lenders. The clerical error has now plunged the Citibank into a battle between the Perelman empire and the lenders.
“It’s a billion-dollar clerical error,” said Michael Stanton, a former restructuring and bankruptcy adviser. “This is probably knocking around some very big rooms at Citibank.”
The lenders, including Brigade Capital Management, Symphony Asset Management, and HPS Investment Partners, are seeking a court order forcing the return of the collateral, which includes brand trademarks. Citi, the administrative agent on the loan, was also named as a defendant in the lawsuit, although it was in the process of resigning from the agent role.