The Second Circuit vacated a February, 2021 decision by the District Court for the Southern District of New York in favor of the defendant loan managers which held the Loan Managers were not obligated to return an accidental payment by Citibank of approximately $500 million.
In a decision rendered September 8, 2022, a three-judge panel for the United States Court of Appeals for the Second Circuit (the “Court”) vacated a February, 2021 decision by the United.
Less than a month after a New York judge ruled that lenders accidentally repaid by Citigroup could keep their money, Citi is trying to stop the firms from using it.
On Tuesday, the investment firm filed a request asking the judge to require the lenders to freeze the transferred funds until Citi files an appeal to a higher court.
According to Citi’s filing, “the money represents a lottery-like windfall of hundreds of millions of dollars [for the lenders]. They were not expecting to receive this money for several years, if at all.”
The filing refers Citi’s “mistaken” repayment of a $900 million loan for cosmetics maker Revlon. The bank had acted as an intermediary between Revlon and the lenders. Although Revlon hadn’t transferred the $900 million to Citi, the bank which said it was intending only to pay the interest due to the lenders repaid the loan in full, court records show.
A New York judge has ruled that the Revlon lenders Citigroup mistakenly repaid can keep the money.
The court decision, written by New York Southern District Court Judge Jesse Furman, shows that he ruled in favor of the 10 investment advisory firms Citi sued in August. The 10 defendants collectively received more than $500 million of the mistaken wire transfers in August, according to the judge, while other lenders returned the money and avoided the lawsuit.
“We strongly disagree with this decision and intend to appeal,” a Citi spokesperson said via email Tuesday. “We believe we are entitled to the funds and will continue to pursue a complete recovery of them.”