Yahoo Finance Citigroup (C) Fails to Recover Accidental Revlon Transfer
Citigroup’s C petition to extend a freeze on $504 million worth funds that were accidently wired to several lenders of the cosmetics brand Revlon, Inc. REV has been turned down by U.S. District Judge Jesse Furman in Manhattan.
Furman said “the amount of money at stake and the compelling arguments” put forth by Citigroup had almost convinced him of putting the funds on hold. However, his decision to reject it was based on a “detailed analysis of the facts and the law”. Thus, Revlon creditors are free to use the money as they will i.e., no objections from Citibank or the court will be entertained.
Notably, Citigroup has seven days’ time to appeal the decision.
This marks as a second failed attempt by Citigroup to recover the amount. In February, the court had ruled that the Wall Street biggie is not eligible for a return of funds wired, on grounds that if an accidental transfer pays off a debt, the receiver is allowed to keep the funds, provided he is not aware of the error and has no role to play in it.
Brief Background
In August 2020, Citigroup had transferred about $900 million to Revlon’s creditors, while intending to send only $7.8 million as interest payment.
Though the lender was able to recover some of the amounts in what it explained to be a “clerical error”, about 10 creditors, including Brigade Capital Management, Symphony Asset Management and HPS Investment Partners, opted to retain the extra amount as debt repayments.
Recently, Revlon replaced Citigroup with MidCap Financial as its collateral and administrative agent on a revolving loan facility. This replacement forms part of an amendment to a 2016 loan agreement that extends its maturity by a year to May 7, 2024.
Our Take
Despite taking measures to combat the rise in expenses, the company’s involvement in litigation issues might keep legal costs elevated. However, it remains committed to executing growth strategies, and continues to make steady progress toward its financial targets.
Shares of the company have gained 47.3% over the past six months compared with 43.1% growth recorded by the industry.
Citigroup currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Wells Fargo & Company WFC has witnessed a 23.7% upward estimate revision over the past 30 days. The company’s shares have rallied 51.2% so far this year. It flaunts a Zacks Rank #1 at present.
M&T Bank Corporation’s MTB shares have gained 24.3% so far this year. Further, the company’s earnings estimates for the ongoing year have moved 6.7% north in the past 30 days. It currently sports a Zacks Rank of 2 (Buy).
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