Citigroup sues HPS, Symphony over mistaken payment on Revlon loan
Citigroup is suing companies that are refusing to return almost half of the more than $900 million it says it accidentally sent to Revlon lenders this month.
The bank filed suit against HPS Investment Partners LLC and Symphony Asset Management LLC late Tuesday in federal court in Manhattan. HPS has refused to return more than $127.3 million and Symphony is holding more than $109.7 million, according to the lawsuit.
The suit comes just after Citigroup won a temporary court order freezing $175 million that Brigade Capital Management LP has declined to return. Citigroup sued Brigade on Monday.
Representatives of HPS and Symphony declined to comment on Tuesday’s suit.
Citigroup had been acting as an agent on Revlon’s loan, collecting payments from the company to distribute to the creditors. The bank said it had intended to make interest payments on Revlon’s behalf but accidentally transferred a sum more than 100 times as big from its own funds. It has begun briefing watchdogs, including the Office of the Comptroller of the Currency and the Federal Reserve, about how it mistakenly misdirected so much money, people familiar with the matter said.
Neither of the two firms sued Tuesday has returned the payments after repeated emails and requests, Citigroup said in the suit. Their actions “threaten the integrity of the administrative agency function and trust in the global banking system.”
Citigroup’s lawyer told a judge Tuesday that Brigade was the only one of dozens of lenders that has “flat out” refused to return the money. The two will be back in court on Wednesday as the judge determines the next steps in their legal battle, including whether to hold a hearing on the bank’s request for a preliminary injunction forcing Brigade to give the money back while the case proceeds.
Brigade, which says it isn’t a Revlon lender itself, told U.S. District Judge Jesse Furman in the hearing that it doesn’t have the $175 million. Citigroup wired payments to about 40 funds that use Brigade as their investment or collateral manager, it says.
The case is Citibank NA v. HPS Investment Partners LLC and Symphony Asset Management LLC, 20-cv-6617, U.S. District Court, Southern District of New York (Manhattan).