(Bloomberg) — Citigroup Inc. is attempting to recover almost $900 million it mistakenly paid to Revlon Inc. lenders who are locked in a bitter fight with the cosmetics company over a 2016 asset transfer.
Some of Revlon’s lenders are refusing to return the money to Citi after they received funds from the bank Wednesday equal to the principal amount of a Revlon loan plus accrued interest, according to people with knowledge of the situation. The bank asked for the money to be returned, citing a clerical error. So far it’s received some but not all of the of the funds back, the people said.
The money didn’t come from Revlon, said the people, who asked not to be named discussing a private matter.
Representatives for Citi and Revlon declined to comment.
The payment error comes as Revlon is embroiled in a legal dispute with a group of lenders over its debt restructuring tactics. On Wednesday, UMB Bank sued the company on behalf of certain dissenting lenders including Brigade Capital Management and HPS Investment Partners, claiming it moved valuable brand assets beyond lenders’ reach to benefit of other creditors.
Along with the suit, UMB sent Revlon a notice of acceleration on the loans, claiming the company is operating under a default, the people said. Revlon said it would fight UMB’s “meritless” lawsuit.
“This group of lenders has repeatedly resorted to baseless accusations in an attempt to enrich themselves and hurt the company by blocking Revlon from exercising its contractual rights to secure the financing necessary to execute our turnaround strategy and navigate the Covid-19 crisis,” Revlon said in an earlier statement.
Revlon, controlled by Ron Perelman’s 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.