In order to resolve a nagging legal question that emerged after the bank mistakenly wired $900 million to the cosmetics giant's lender, Citigroup Inc. has sued Revlon Inc.
The bank stepped into the shoes of funds who refused to return $500 million of the mistake when it became a lender to Revlon. Citi filed a suit in the bankruptcy court Friday after being warned that it might be challenged as a creditor.
The judge is being asked to clear up any doubts about the right to repay the term loan. Lawyers for Citi said in the complaint that denying the bank its rights as a creditor would allow Revlon to escape liability for its own debt obligations.
According to court papers, the bank didn't know anyone would challenge its status as a creditor until days before the company filed for protection. The bank's rights as a secured lender in the company's bankruptcy financing package were not acknowledged by the company and some of its creditor.
Lawyers for Citi said that neither the Revlon Group nor any other party-in-interest had articulated any legitimate legal or factual basis for challenging Citibank's subrogation rights. There isn't a single one.
There was no response to a request for comment Monday.
The US Bankruptcy Court for the Southern District of New York adjudicates bankruptcies.
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