(Bloomberg) – Brigade Capital Management LP told a federal judge that it could not repay $ 175 million that Citigroup Inc. says it paid as part of a $ 900 million mistake because the money went to other funds, while the bank says Brigade is the only one of dozens of lenders that “flat” refused to return the money to give.
Citigroup, which on Monday sued the money manager, paid payments to about 40 funds that Brigade uses as its investment or collateral manager, and knows that Brigade itself is not one of the lenders and does not have the money they are looking for, he said. Brigade in a legal submission Tuesday. The bank has asked the court to order the company to return its $ 900 million share that it accidentally gave to Revlon Inc. lenders. wired, some of whom are trapped in a bitter battle with the troubled cosmetics giant.
Citigroup has returned less than half of the money, which is due to a church error, and some lenders refuse to pay, saying Revlon was defaulting on a loan and should have repaid it anyway, according to people with knowledge of the case . But at a hearing on Tuesday before U.S. District Judge Jesse Furman, a lawyer for the bank said Brigade is the only lender who has immediately declined, while others have returned the payments and Citigroup is in talks with still others.
“It was Brigade, the largest lender here, that refused to return the funds on the grounds that they were not made by mistake,” said attorney Matthew Ingber.
Read more: Citigroup pleads for brigade capital over improper Revlon transmission
Citigroup, the lending agent for the loan, said it was intended to make interest payments on behalf of Revlon, but accidentally transferred a sum more than 100 times as large. The bank has begun informing watchdogs, including the Office of the Currency Controller and the Federal Reserve, about how it mistakenly misappropriated so much money, people familiar with the matter said.
“You have to have a very large gum on your pencil for a $ 900 million mistake,” said Vincent Indelicato, a partner at the law firm Proskauer Rose LLP, which is a member of the practice of restructuring and bankruptcy and is not involved. at the case.
Brigade would receive $ 1.5 million in interest on loan of $ 174.7 million, according to the Citigroup lawsuit. Instead, it received $ 176.2 million and refused to return the funds “despite crystal clear evidence that the payments were made incorrectly,” Citigroup said.
If Brigade chooses to ‘ignore the math’, the company would ‘at least have to ask itself why the interest was paid,’ Ingber told the judge at Tuesday’s hearing.
Brigade said the lenders ‘every ponge was legal’ transferred by Citigroup in the name of Revlon and did not know the payments were a mistake. The bank is targeting Brigade “for strategic reasons”, but the money in order has already been distributed to the actual lenders, said Robert Loigman, a lawyer for Brigade.
“A kind of target brigade as if they were the funder here makes no sense and does not work,” Loigman said.
The judge said he would rule later on Tuesday on Citigroup’s request for a temporary restraining order blocking Brigade from doing anything with the funds pending resolution of the lawsuit.
Furman has sat on the bank for his share in credit bridges. He oversees the case of Windstream v. Aurelius Capital Management LP, ruling in favor of the hedge fund over a transfer of assets.
The case is Citibank NA v Brigade Capital Management, 20-cv-6539, U.S. District Court, Southern District of New York (Manhattan).
(Updates with Tuesday’s hearing)
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