Some of the Revlon Inc. creditors who were being unintentionally sent $900 million plus by Citigroup Inc. requested a federal court appeal for a rehearing after it ruled money had to be returned.
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That decision overturned a lower-court ruling that kept $504 million as the bank misguidedly bound them in 2020. Some of the lenders had repaid the money. In a case that became the talk of Wall Street, the panel’s decision became a liberating win for Citigroup’s foremost banking unit in its efforts to recompense the disconcerting blunder, forcing the bank to elucidate to regulators the possibility of the failure. The lawful dispute turns on the “liberation for value” defence, established by a 1991 New York Court. It ruled that the creditors could keep the money sent to them in error if they didn’t comprehend the payment was a mistake. The lenders said the Appellate Panel’s decision was “Unsettled earlier established New York law, like parties in financial transactions can wonder whether the New York courts would adopt this court’s Newly Crafted exclusions to the discharge-for-value rule.”
“The Second Circuit’s undisputed and highly detailed decision is supported by robust legal analysis and reiterates our long-held confidence that these misguidedly relocated funds should be refunded as a matter of law, as well as ethics,” said Spokeswoman Danielle Romero-Apsilos in an emailed statement. The Senior Bloomberg Intelligence Litigation Analyst Elliott Stein said that he would be astonished if the appeals court grants the lender’s demand for an en banc, or fuller court, the review showed.
“Citigroup, which was substituted as an administrative mediator on loan in question, was trying to send the interest payment to Revlon lenders but fortuitously paid off all the creditors on loan. It recovered almost half of the funds, but others refused to give their money back by saying that Revlon had already defaulted and should have repaid the funds to them.