Citigroup Inc asked a federal court to order Brigade Capital Management LP to return its share of more than $900 million that the bank mistakenly wired to Revlon Inc lenders, some of which are locked in a bitter fight with the struggling cosmetics giant.

The bank has recouped less than half of the money, which it blamed on a clerical error. Some of the lenders are refusing to give it back, including three firms that claimed Revlon was in default on a loan and should have repaid them anyway, according to people with knowledge of the matter.

In a lawsuit filed on Monday in New York, Citigroup, which is the administrative agent for the loan, said it intended to make interest payments on Revlon’s behalf but accidentally transferred amounts more than 100 times greater. Brigade was supposed to receive $1.5 million in interest on loan principal of $174.7 million, according to the complaint. It instead got $176.2 million and has refused to repay the funds despite crystal-clear evidence that the payments were made in error, Citigroup said.

US District Judge Jesse Furman in New York scheduled a phone conference for Tuesday morning to discuss Citigroup’s request for a temporary restraining order.

A representative for Brigade declined to comment on Citigroup’s lawsuit.

The August 11 payment arrived just before Brigade and other lenders, including HPS Investment Partners and Symphony Asset Management, sued Revlon over its debt-restructuring tactics. The loan trades for less than 30 cents on the dollar, signalling that investors have dim hopes of getting a full recovery under normal circumstances.

A representative for Revlon said the company didn’t pay down the loan or any portion of it. Citigroup said in its suit that the payment was from its own funds, rather than Revlon’s.

Citigroup rejected Brigade’s contention that the money should be regarded as a loan repayment.

Brigade should have known that a surprise repayment of principal could not be made under the governing credit agreement, Citigroup said. And it was well aware that virtually no company, let alone a distressed retail and consumer company such as Revlon, would ever make such a substantial repayment while dealing with the significant financial consequences caused by the ongoing pandemic.

Revlon, controlled by Ron Perelmans MacAndrews & Forbes, has struggled to remain relevant and stem falling sales amid competition from Estee Lauder Cos. and a host of smaller companies using social media to lure customers. Saddled with nearly $3 billion of debt, the retailer has been hit hard by the pandemic and is seeking to rework its borrowings.

Because of the lender suit, Citigroup had already been in the process of resigning from its role as administrative agent before the payment mishap, the people said. The bank has begun to brief regulators about the situation, including the Office of the Comptroller of the Currency and the Federal Reserve, Bloomberg reported.

The case is Citibank NA v Brigade Capital Management, 20-cv-6539, US District Court, Southern District of New York (Manhattan).

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