Citibank is facing a significant problem because it wrongly sent 175 million dollars to Brigade Capital Management, and the hedge fund didn’t give back the amount.
On Monday, the American banking giant submitted a lawsuit in New York’s Southern District, looking for a refund of the payment that the funds were transferred by an operational mistake.
#Citibank has a big problem: It mistakenly wired roughly $175 million to Brigade Capital Management, and the hedge fund hasn’t returned the money. https://t.co/fKGcji8JaL
— The Epoch Times (@EpochTimes) August 19, 2020
The bank declared in the court documents that it was sending Brigade Capital of near about 1.5 million dollars in interest money on loan the hedge fund deal to trouble cosmetics firm known as Revlon. Moreover, the bank roughly sent the amount around a hundred times of its personal funds to the hedge fund. Several other creditors of Revlon also attained mistaken money, adding more than 900 million dollars.
Source: Web
Revlon denied to refund the payment
The bank, which performed as an administrative agent on the firm (Revlon) loan, accuses in the documents that Brigade Capital is denying to give back the payment.
In the statement, Citibank wrote that Brigade has gotten the baseless position that the bank’s excessive payment served to pay off the company’s whole principle balance as well.
To back that accusation, Citibank adds a message allegedly sent by Brigade Capital that describes it is not at all clear that the money was transferred as a result of a clerical mistake.
On Tuesday, Brigade Capital denied to comment when the company contacted by a media outlet, CNN Business. Furthermore, the bank described that the actions of Brigade Capital are unconscionable, and Citibank asked the court to force Brigade Capital for the refunding of the money.
In a complaint, Citibank described that any other consequence would risk the stability of the bank and reward bad actors that attempt to capitalize on working mistakes.
A spokesman of the firm said, when contracted by a media company, CNN, that they abruptly caught their payment mistake and are taking the adequate actions to refund those payments.
The firm, Revlon, in 2016, got another United States’ cosmetic brand known as Elizabeth Arden in a contract financed by 1.8 billion dollars loan of which Brigade Capital gets a slice. Besides this, the bank is collecting money from Revlon, under the credit agreement, to send to the lenders.
