(Bloomberg) – Citigroup Inc. dismissed as lead organizer for a mandatory loan for loans managed by Brigade Capital Management amid an escalating legal dispute between the two sides over an incorrect loan payment.
© Photographer: Michael Nagle / Bloomberg
Pedestrians walk past a Citigroup Inc. branch of Citibank in New York.
The bank dropped out of its role on Brigade’s $ 400 million Battalion XVIII CLO deal, which was due to award on Wednesday. It sent a notice of termination to the company on Tuesday, citing failure of certain terms set forth in its engagement letter, according to documents seen by Bloomberg News.
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A Brigade representative declined to comment. A Citigroup spokeswoman confirmed the dismissal, but declined to comment further.
The dismissal signals an escalation of the feud between Citigroup and Brigade that took place in court on Monday. It involved a $ 900 million payment that Citigroup accidentally made to lenders to Revlon Inc. amid a bitter fight between the cosmetics company and its creditors. While some lenders chose to return the money to Citigroup, others, including Brigade, at least initially refused to return the money. Citigroup won a temporary lawsuit on Tuesday with release of the $ 175 million in funds that Brigade refuses to return.
Brigade and other parties to the CLO are working to find a replacement for Citigroup, according to a person with knowledge of the case, who was asked not to be identified to discuss a private transaction.
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