Citigroup to return 500 million
2022.12.06 00:48
Citigroup to return 500 million
Budrigannews.com – Citigroup Inc. (NYSE:) according to a court filing, is making “substantial progress” toward resolving the dispute after accidentally paying out $500 million to ten Revlon Inc. lenders. Three of them are on the verge of doing so, and others are making “substantial progress” toward doing so.
In August 2020, Citigroup, acting as the loan agent for Revlon, accidentally used its own money to pay off an $894 million loan that billionaire Ronald Perelman’s now-bankrupt cosmetics company owed.
The mistake, which Citigroup blamed on human error, led some recipients to return their payments, but the ten lenders had refused, claiming that the bank had paid what they were owed.
Lawyers for Citigroup and the lenders, which include hedge funds and investment funds, discussed the possibility of a settlement in a letter that was filed late on Monday night in Manhattan federal court.
Citigroup has been suing Brigade Capital Management, HPS Investment Partners, Symphony Asset Management, and the other lenders for more than two years over a mistake that the bank’s chief executive Jane Fraser called a “massive unforced error.” A resolution would put an end to that litigation.
The letter states that three lenders have “indicated they are ready to sign an agreement” to end the litigation, while the other lenders are still collaborating with other parties before committing to a payment return date.
According to the letter, “The parties have a mutual interest in resolving the time frames to enable resolution.” The status of the talks should be updated soon, according to proposals from both sides.
A U.S. appeals court in Manhattan ruled in September that the lenders did not deserve a “huge windfall” and overturned a federal district judge’s February 2021 decision that said the lenders could keep their payments.
Citigroup’s previously reported profit had been reduced as a result of the earlier ruling to reflect $390 million in additional legal costs.
The lawyers said last week that “material terms” of a possible settlement called for Citigroup to get its money back and transfer some payments for interest and amortization.
On June 15, Revlon submitted a Chapter 11 bankruptcy petition.
