The makeup company Revlon banks with Citibank. The bank meant to transfer 8 million to Revlon's creditors as an interest payment. Instead it transferred 900 million! In August Citibank filed suit to get that money back. 492 million has been returned but 508 million has not. That includes one hedge fund that received 175 million instead of the $175,000 they were supposed to receive.
Yesterday US District Court judge Jesse Furman ruled that those lenders could keep the money. This is because NY has the "discharge-for-value-defense." It means if the bank transfers money that you believe you have the right to then they can't expect it back. In this instance it turns out that the money transferred paid off the loans. Just 20 years early. It's like if your mortgage payment of $1000 was transferred automatically every month but this month they sent $100,000. The company that holds the mortgage could assume that you were paying it off early.
Benjamin Finestone, who represented two of the lenders, Brigade and HPS Investment Partners said; "We are extremely pleased with Judge [Jesse] Furman's thoughtful, thorough and detailed decision."
Citigroup has to cover this money since it was their mistake and is working with Revlon to set up a payment plan where they continue to make their 8 million dollar monthly payments directly to Citigroup. However they won't be till after their appeal. In their statement they said "We strongly disagree with this decision and intend to appeal. We believe we are entitled to the funds and will continue to pursue a complete recovery of them."