The U.S. banking giant filed a lawsuit in New York’s Southern District on Monday, seeking to return funds it said were transferred in an “operational error.”
Citibank, which acts as an administrative agent on the Revlon loan, claims in court documents that Brigade Capital refuses to return the money. “Brigade has taken the baseless position that the supremacy of Citibank … served to pay even the full principal balance of Revlon,” the bank wrote in its complaint.
To support that accusation, the bank includes a message sent by Brigade Capital that says it is “not at all clear that the funds were sent as a result of ‘clerical error’.”
Brigade Capital declined to comment when contacted by CNN Business on Tuesday. Citibank said the actions of Brigade Capital were “unconscious” and asked the court to force the proceeds of the money.
“Any other outcome would jeopardize the stability of the banking system [and] reward bad actors who try to capitalize on operational mistakes, “the bank said in its complaint.
“We have caught our payment error quickly and are taking appropriate action to recover these funds,” a spokesman added when contacted by CNN Business.
In 2016, Revlon bought Elizabeth Arden, another American cosmetics brand, in a deal funded by a $ 1.8 billion loan from which Brigade Capital holds a slice. Under the credit agreement, Citibank collects payments from Revlon to give to the lenders.
In its complaint, Citibank said Brigade Capital had no reason to expect a major payment from Revlon.
“Virtually no company, let alone a distressed retail and consumer company like Revlon, would ever make such a substantial advance while dealing with the significant financial consequences caused by the ongoing pandemic,” the complaint read.
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