Hedge Funds: Citi Wins Battle Against Hedge Fund and Creditors 

Citigroup won its battle to regain $900 million that it sent to cosmetic company Revlon creditors.  Citi accidentally sent this money and intended to recover the funds as soon as possible.   In addition, a U.S. judge blocked hedge fund Brigade Capital from doing anything with the $175 million it accidentally received from Citi.  Eventually, the judge intends to make Brigade return the $175 million.  

Following Citi’s accidental transfer of $900 million, Revlon creditors sued Revlon for its restructuring strategy.  Citi was in charge of collecting loan payments.  Instead of paying the loan payments, Citi erroneously paid creditors from its own funds.  This mistake has drawn all parties in this transaction under more scrutiny.  According banking analyst Dick Bove from Odeon Capital Group, there will be a lot more information and explanation for the regulatory mistake.  He stated, “A payment error by the nation’s only truly international bank is likely to cause significant questions concerning the systems the bank is using.”  

All 43 of Brigade’s funds that are in relation to Revlon creditors have refused to return the $175 million.  According to attorney Robert Loigman — a representative for Brigade — “To target Brigade as if they were the lender here, it just doesn’t work and it doesn’t make sense with respect to the type of relief they’re seeking.”  However, an attorney for Citigroup claims that Brigade has the power to return the money as the manager of the funds.  The attorney also claims that failure for the court to force Brigade to return the funds can set a harmful precedent.