Citigroup Is Attempting to Collect A $500 Million Loan Repayment From Revlon

Citigroup Inc is negotiating the reimbursement of around $500 million it unintentionally paid to a consortium of hedge funds and investment firms on a debt due by insolvent cosmetics giant Revlon Inc, led by billionaire Ronald Perelman.

In a letter filed Thursday in federal court in Manhattan, representatives for the bank and the lenders indicated that they were seeking a "consensual solution" to prevent Citigroup (NYSE:CAugust) from filing a lawsuit in 2020 to collect the wrong payment.

The attorneys have claimed that "essential components" of a settlement would include the return of Citigroup's cash, with the bank repaying the interest and amortization payments it has received since early 2021.

It was announced on November 10 that settlement discussions had commenced. The attorneys asked permission from U.S. District Judge Jesse Furman to submit an update by December 5.

Citigroup, which was Revlon's loan agent, repaid the company's $894 million loan three years early with its own cash in August 2020, rather than pay $7.8 million in interest.

Human error was mentioned by the bank as the reason why some recipients returned money.

However, 10 asset managers, including Brigade Capital Management, HPS Investment Partners, and Symphony Asset Management, rejected, asserting that the bank had met its commitments.

Citigroup reduced previously announced earnings by $390 million to account for higher legal expenses when Furman sided with the defendants in February 2021.

In September, the federal appeals court in Manhattan reversed that ruling, finding that it would result in a "huge windfall" for the group at the expense of Citigroup.

Revlon filed for Chapter 11 bankruptcy protection on June 15.

In re Citibank August 11, 2020 Wire Transfers, Southern District of New York United States District Court, Case No. 20-06539.