Whoever finds a winner: Citibank will not receive the 500 million d that it transferred by mistake – Global

In August last year we reported here how a human error in Citibank (C) caused that instead of transferring $ 8 million to the international toiletries company Revlon (REV) – which was then in huge difficulties due to Corona’s effects – $ 900 billion was transferred to the company’s borrowers.

It took City 24 hours to figure out the magnitude of the mistake and they tried to get the money back to them. They managed to repay $ 400 million, but this week the New York court ruled that the bank would not get back half a billion dollars.

Why did City lose in court? An old 30-year-old law called “Whoever finds a winner.” Or in English Finders keepers. The law states that in some financial cases, a third party who received money that was owed to him, when things are not done out of the active action of those who owe them, whoever transferred the money will not be able to ask for the money back.

District Judge Jesse Foreman ruled in the judgment that “the transfers matched up to the penny level, including the interest on the loan. The accompanying statements referred to the debtors’ interest and they received the full amount, even though the due date had not been reached.”

City argued that only the size of the transfer was supposed to light bulbs at the investors who received their money, but the judge ruled that was not the case. “Given the existing protections in the bank to prevent such cases from happening, it would seem almost impossible for a reasonable investor that the bank would mistakenly transfer an amount of $ 900 million,” the judge ruled.

“We strongly oppose the decision and will appeal it,” a City spokeswoman said after learning of the trial. “We will continue to fight until we get all the money back,” she added and it is possible that the appeal will indeed be accepted.

How did we get this far?
Last summer, Revlon’s lenders, including Brigade Capital and Symphony Property Management, sued the company and asked the court to order the company to repay the loan immediately and not in 2023, so it expires. According to them, Revlon sold some of her spiritual assets, which were supposed to help her repay the debt – and which served as a guarantee to repay the loan. Revlon claims it was forced to sell the assets as part of a process of reorganization.

About the time the lawsuit was filed, the said lenders received all the money they claimed, which also included repayments on arrears. Even then, the funds that received the funds announced that they did not intend to return it due to the risks that bond lenders have in the event of insolvency.