THE WHAT? Citigroup has petitioned the 2nd US Circuit Court of Appeals in Manhattan in a bid to recover the US$504 million it sent to Revlon creditors in error, according to a report published by Reuters. The bank’s argument centers around the fact that none of the lenders were expecting to be repaid by the cosmetics company.
THE DETAILS In response, the asset managers who held onto the funds paid to them in error countered that they had no reason to believe that a bank of Citigroup’s caliber would make such a major mistake and Revlon owner Perelman has been known to bail out his beauty firm in the past.
THE WHY? A first instance judge ruled earlier this year that the creditors were entitled to keep the cash as it represented a ‘discharge for value’. Citigroup is clearly keen to recoup the funds while the wider banking industry is hoping Citigroup prevails because the District Court judgement exposes them to greater liability risks.