Some of the Revlon creditors who were accidentally sent more than $900 million by Citigroup were denied a bid for a wider review of an appeals court ruling that they had to give the money back.
The lenders — which include Brigade Capital Management LP, HPS Investment Partners LLC and Symphony Asset Management — asked the 2nd U.S. Circuit Court of Appeals last month to have a larger group of judges review the decision by a three-judge panel.
The panel had reversed a lower-court ruling that they could keep $504 million the bank mistakenly wired them in 2020. Some lenders had already given back the money they received.
The court on Wednesday denied the request without comment.
Bloomberg Intelligence senior litigation analyst Elliott Stein said the denial was expected and that he doesn't see the U.S. Supreme Court taking the case, should the lenders ask it to. They have 90 days to file such a petition with the high court, Stein said.
Talk of Wall Street
Lawyers at Quinn Emanuel representing the lenders declined to comment on the ruling. Citigroup said it was "pleased."
"We believe the Second Circuit's unanimous and highly detailed decision is supported by strong legal analysis and reaffirms our long-held belief that these mistakenly transferred funds should be returned as a matter of law, as well as ethics," spokeswoman Danielle Romero-Apsilos said in a statement.
The panel's September decision, in a case that had become the talk of Wall Street, was a redemptive win for Citigroup's main banking unit in its efforts to redress the embarrassing blunder, which forced the bank to explain to regulators how such a failure was possible.
The legal battle turns on the "discharge for value" defense, established by a 1991 New York court ruling that creditors can keep money sent to them in error if they didn't realize the payment was a mistake.
The lenders said the appellate panel's decision "unsettled previously established New York law, such that parties in financial transactions can only wonder whether the New York state courts will adopt this court's newly crafted exceptions to the discharge-for-value rule."
The case is Citibank NA v. Brigade Capital Management LP, 21-487, 2nd U.S. Circuit Court of Appeals (Manhattan).
— With assistance from Katherine Doherty and Jenny Surane.
