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Legal fight after Citi accidentally sends $176m to hedge fund

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·1-min read
Photo by: John Nacion/STAR MAX/IPx 2020 8/3/20 A view of a Citibank logo as Bloomberg report "Citi Sued by Gay Employee for Discrimination, Retaliation". New York City continues to Phase 4 of re-opening following restrictions imposed to curb the coronavirus pandemic on August 3, 2020 in New York City. Phase 4 of reopening: Zoos, pro sports, TV and movie crews.
Citi mistakenly sent $900m to creditors of struggling cosmetics company Revlon. Photo: AP

Citigroup (C) has started legal action against a New York hedge fund after the bank mistakenly transferred it millions of dollars.

The BBC and Bloomberg reported that Citigroup has filed papers with the Southern District of New York Court to try and force Brigade Capital to return $176m (£134m). The sum was mistakenly sent to the hedge fund by Citi last week.

Citi was acting on behalf of struggling cosmetics company Revlon and meant to sent Brigade just $1.5m as an interest payment on a loan.

Citi ultimately sent $900m by mistake to Revlon’s lenders, blaming a clerical error. So far it has received less than half of the sum back, according to Bloomberg.

A spokesperson for Citi told Yahoo Finance UK: “We quickly caught our payment error and are taking the appropriate actions to recover those funds.”

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Citi claims Brigade, which has lent Revlon $174.7m, has so far refused to repay the money back “despite crystal-clear evidence that the payments were made in error,” according to court filings seen by the BBC.

The court action comes amid a fight between Revlon and its creditors, including Brigade. Revlon is currently trying to restructure its debt but faces resistance from creditors who fear they will lose out. Brigade and other lenders have started legal action against Revlon to try and block its restructuring.

A representative for Brigade declined to comment.