Posted on 08/18/2020 4:17:10 PM PDT by MarvinStinson
Citibank has a big problem: It mistakenly wired roughly $175 million to Brigade Capital Management, and the hedge fund hasn't returned the money.
The US banking giant filed a lawsuit Monday in the Southern District of New York, seeking the return of funds that it said were transferred in an "operational mistake."
Citibank said in court documents that it meant to send Brigade Capital around $1.5 million in interest payments on a loan the hedge fund made to troubled cosmetics company Revlon. Instead, it wired roughly 100 times that amount of its own funds to the hedge fund. Other Revlon creditors also received erroneous payments adding up to $900 million.
Citibank, which acts as administrative agent on the Revlon loan, alleges in court documents that Brigade Capital is refusing to return the money. "Brigade has taken the baseless position that Citibank's overpayment ... served to pay off Revlon's entire principal balance as well," the bank wrote in its complaint.
Citibank said Brigade Capital's actions are "unconscionable" and asked the court to force the return of the money.
"Any other outcome would threaten the stability of the banking system [and] reward bad actors that try to capitalize on operational mistakes," the bank said.
"We quickly caught our payment error and are taking the appropriate actions to recover those funds," a spokesperson addeds.
In 2016, Revlon acquired Elizabeth Arden, another American cosmetics brand, in a deal financed by a $1.8 billion loan of which Brigade Capital holds a slice. Under the credit agreement, Citibank collect payments from Revlon to give to the lenders.
Revlon shares are trading at $7.71 a share, down from recent high above $27 posted in October 2019.
(Excerpt) Read more at msn.com ...
Can they afford to write down $175 billion?
I mean million.
oops
Possession is 9/10 of the law.
Citibank, transfer $175 million to me, and I promise I’ll return more than $5 of it.
“”Any other outcome would threaten the stability of the banking system [and] reward bad actors that try to capitalize on operational mistakes,” the bank said. “
Returning the money would reward bad actors that can’t be arsed to double-check their work before pressing the execute button and would mean that they could continue to not be held responsible for their actions.
Citibank needs a lesson in holding people responsible.
I’d like to test that statement with millions of dollars of Citibank’s money.
They’ll make it back in a few days on overdrafts and bounced check fees.
Knowing some of the judges today, you might just get away with it.
Riiight....
Like stolen goods from a looted BestBuy!
So if you accidentally sent in 10X your bill payment it would be tough luck for you?
In addition to lots of other statues and regulations, there is an old common law principal of unjust enrichment. Finder’s keepers is not a legal principal. And if I were the judge I would award interest and damages for each day the money is not returned as well.
You make a mistake with Citibank and see how quick they forgive and return your money....not.
I have now decided that I share Citibank’s position and that, therefor, the 175 million dollars should be returned to Citibank and me.
Too bad Citibank. Live by the rules that you force on your customers.
Suck a HUGE lemon.
You were close. 175 million went to one hedge fund but another 900 million went to other Revlon creditor by mistake. That’s 1 billion 75 million Citibank gave away in error on Revlon’s behalf.
Gotta wonder what programming error caused this. Hard to imagine it was just some clerk entering the wrong amounts. Seems to me we would have a hard time getting funds back from Citibank if they were accidentally overpaid on an outstanding balance.
I have seen this happen with double rent payments, I have seen this with a certain bank opening a new account for me at a local branch and pulling funds into it from the wrong account then coming after me when they had shorted the incorrect source account. All three accounts were at the same bank. I was livid and had to go fight them over their error.
It’s not unjust since the payment went toward an outstanding principle amount rather than just interest. Citibank is trying to say oops, my bad, for overpaying, but you try to do that with them and they will laugh in your face.
They also overpaid others by 900 million on Revlon’s behalf.
Setting up the mother of all refund scams.
Nice try. Inter alia, there is a written contract covering interest and principal payments.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.