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, which acts as an 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.
To support that allegation, the bank includes a message purportedly sent by Brigade Capital that says it’s “not at all clear that the funds were sent as a result of ‘clerical mistake.’ “
Brigade Capital declined to comment when contacted by CNN Business on Tuesday. 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 in its complaint.
“We quickly caught our payment error and are taking the appropriate actions to recover those funds,” a spokesperson added when contacted by CNN Business.
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.
In its complaint, Citibank said that Brigade Capital had no reason to expect a large payment from Revlon.
“Virtually no company, let alone a distressed retail and consumer company such as Revlon, would ever make such a substantial prepayment while dealing with the significant financial consequences caused by the ongoing pandemic,” the complaint reads.
Source : CNN