A hard-fought battle between Citigroup Inc. and creditors of Revlon Inc. over an epic blunder in which the bank accidentally sent the lenders almost a billion dollars was finally capped with a legal pronouncement: Case dismissed.
The order of dismissal came Monday after the last holdouts among the lenders agreed to return their share of $504 million the creditors still had following Citigroup’s victory in court. That sum was part of an original errant payment of more than $900 million, some of which had already been voluntarily returned to the bank by other recipients.
“Any pending motions are moot,” US District Judge Jesse Furman in Manhattan wrote in the order of dismissal. “All conferences are canceled. The Clerk of Court is directed to close the case.”
It’s an ordinary document closing an extraordinary case, in which the bank sued the creditors — including Brigade Capital Management, HPS Investment Partners and Symphony Asset Management — for the return of the funds. Citigroup had mistakenly transferred them in August 2020 while trying to make an interest payment as an administrative agent on a loan, a blunder that became the talk of Wall Street.
In February 2021 the lenders won a surprise trial court decision saying they didn’t have to return the money. The judge said the creditors shouldn’t have been expected to know that the transfer was an error. Then, three months ago, a federal appeals court overturned the trial court’s decision. It was a major victory for Citigroup’s main banking unit in its efforts to redeem the embarrassing lapse, which forced the bank to explain to regulators how such a failure was possible.
Citigroup declined to comment on the case’s conclusion Monday. Lawyers from Quinn Emanuel representing the lenders, and representatives for Brigade, Symphony, and HPS also declined to comment.
Even after Citigroup’s victory at the appeals court, the funds still had to be returned. On Dec. 5 the bank and the lenders told Furman that three of the defendants were prepared to sign an agreement ending the litigation, while there had been “substantial progress” in talks with the others. On Friday they told the judge that all 10 of the creditors had signed an agreement to send back the money.
There is still a chance the Dickensian case has some life left in it. In his order Monday, Furman gave the parties 60 days to reopen the action “if the settlement is not consummated.”
The case is Citibank NA v. Brigade Capital Management, 20-cv-6539, U.S. District Court, Southern District of New York (Manhattan).
