In a lawsuit filed by Citigroup Inc. suing some of Revlon Inc. (REV) creditors to recoup about $900 millions, the defending creditors has now asked for an expert opinion about whether the creditors should have known the transfer was in error.
Last month, Citigroup erroneously sent nearly $900 million to creditors of troubled cosmetics company Revlon Inc. The repayment occurred a day after lenders sued the cosmetic company over its restructuring strategies.
Citigroup has been acting as agent on the loan to Revlon. Being administrator, it collected payment from the cosmetic company to distribute to the lenders. But the banking company said that an employee error caused it to mistakenly pay out a sum 100 times more than the interest payment the creditors are to be repaid. The accidental payment came from the bank’s own funds.
Seeking recovery of mistakenly transferred money, the bank has filed lawsuit last month against 11 creditors. The trial in the lawsuit is scheduled for November.
The creditors mid-this month requested U.S. Judge Jesse Furman to allow them to submit testifying statement of an industry expert without disclosing his name. The expert is a seasoned professional in the corporate loan market with an experience spanning over four decades. The expert served at senior management level positions in several financial institutions looking after establishment and management of global loan businesses of those organizations.
This expert will give opinion on how lenders and their managers in the market would respond to wire transfers like those at issue in the case. This opine will also shed light on how the related circumstances and event leads lenders to consider such recipts, the creditors said in the filing.
Despite the fact whether the creditors were in knowledge of the authenticity of the receipt, a case law in New York allows them to keep such receipts if they do not know about the flawed nature of the transaction or if the transaction is mismatch with the course of business itself.
Citigroup is in view that larger size of the transaction speaks itself about the misrepresentation of that transaction.