Citi Loses Round to Recover $ 500 Million in Revlon Loan Case
Citigroup (VS) – Get a report Tuesday, lost a turn in a court case after a federal judge said the financial services giant could not recover $ 500 million it had mistakenly transferred to lenders at cosmetics maker Revlon. (TOWER) – Get a report
US District Judge Jesse Furman in Manhattan said the August 11 wire transfers in question were “final and complete transactions, not subject to revocation.”
“To believe that Citibank, one of the most sophisticated financial institutions in the world, had made a mistake that had never happened before, to the tune of nearly a billion dollars would have bordered on irrationality.” , Furman said, according to Bloomberg.
These payments were part of more than $ 890 million that Citigroup paid to Revlon lenders as part of its role as Revlon’s loan officer. These payments closed a loan that was not due until 2023.
The New York financial services giant intended to pay just $ 7.8 million in interest on the loans. He attributed the error to human error.
Some lenders returned the money sent to them, but 10 asset managers refused, leading Citigroup to take legal action to recover the estimated $ 501 million they received.
Citi did not immediately return a call from TheStreet seeking comment.
Last month, Citi posted Higher than expected fourth quarter profit, in part due to a release of $ 1.5 billion of reserves for potential loan losses.
Citigroup gained $ 2.09 per share adjusted, up 60% from the previous year quarter and ahead of the Wall Street consensus forecast of $ 1.31 per share.
Group revenue, Citigroup said, fell 10% to $ 16.5 billion, missing analysts’ estimates of $ 16.7 billion.
Citigroup said it released about $ 1.5 billion related to the release of previous loan arrangements. Its year-end allowance for bad debts was valued at around $ 25 billion.
Citi shares at last check were trading up 0.7% at $ 64.10.