Citigroup Inc. C has won an appeal to retrieve $500 million that was sent accidentally in 2020 to a group of Revlon Inc. REV creditors.
What Happened: In August 2020, Citi accidentally sent $900 million to a group of Revlon creditors. The actual operation involved sending interest payments to Revlon creditors, but instead, the bank sent out a payment for the entire loan. Some creditors returned the mistaken sum for about $400 million, but others refused, citing a “discharge for value” defense, reported Bloomberg.
This defense is based on a 1991 New York court ruling, which stated that creditors can keep mistaken payments as long as they were not aware the money was sent as part of an error.
After the mistake, Citi sued the creditors unwilling to return the sums, which include Brigade Capital Management LP, HPS Investment Partners LLC and Symphony Asset Management.
In February 2021, U.S. District Judge Jesse Furman ruled in favor of the creditors, allowing them to (temporarily) keep the money, on the back of the aforementioned “discharge for value” defense.
What’s Next: Citi took the matter up to a Federal appeal court led by three Federal judges based in New York. The trio ruled in favor of Citi on Thursday, forcing the lenders to return the disputed funds to Citi.
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REV Price Action: Shares dropped substantially after news of the ruling first appeared on Thursday afternoon, diving from $6.40 to $5.95. Stocks recovered quickly, closing Thursday’s trading session at $6.40, though still down from a previous close of $6.68.
Photo: Beyond My Ken on Wikimedia Commons
Image and article originally from www.benzinga.com. Read the original article here.