Make Kitco Your Homepage

Citigroup seeks longer Revlon fund freeze during appeal over botched payment

Kitco News

NEW YORK (Reuters) - Citigroup Inc wants a U.S. judge to extend a freeze on about $504 million that it mistakenly sent a group of Revlon Inc lenders, while it appeals his decision that they can keep the money.

In a Tuesday night filing, Citigroup asked U.S. District Judge Jesse Furman in Manhattan to convert his temporary freeze over the funds into a longer-lasting injunction.

Citigroup said giving the 10 lenders freedom to distribute the funds to their investors would make it “very difficult, if not impossible” to recoup the money even if it won its appeal.

Its Citibank unit had intended last August to make a small interest payment on Revlon’s behalf, but used its own money to repay the cosmetics company’s roughly $894 million loan in full.

While about $390 million has been repaid, Furman ruled on Feb. 16 that the 10 lenders including Brigade Capital Management, HPS Investment Partners and Symphony Asset Management need not repay the remainder.

Robert Loigman, a lawyer for the lenders, said in an email they would oppose an injunction, and called Citibank’s argument that it was likely to succeed on appeal “without basis.”

The lenders’ formal opposition is due on March 12.

Citigroup said Furman’s decision could make it too risky to perform wire transfers, the “basic building blocks” of the global financial system, and force loan agents to buy costly insurance against the risks of a “finders, keepers marketplace.”

Last week, Citigroup lowered its previously reported fourth-quarter profit to reflect Furman’s Feb. 16 decision, adding $390 million of expenses to cover losses “related to certain legal matters.”

Reporting by Jonathan Stempel in New York; Additional reporting by Imani Moise; editing by John Stonestreet

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.