Citigroup Inc. is punishing investment firms that kept payments the bank accidentally sent to Revlon Inc. lenders by blocking them from certain new debt offerings led by the bank, Bloomberg News reported. The bank is choosing to not invite these money managers, who hung on to over $500 million, to its new-issue debt deals. Firms targeted include Brigade Capital Management, HPS Investment Partners and Symphony Asset Management. These firms and others tangled in a lawsuit with Citigroup can still participate if an issuer specifically requests for them to be able to join their offering. The move follows the surprise ruling by a federal judge that thwarted Citigroup’s efforts to recover funds it sent by mistake to Revlon’s lenders last year while serving as administrative agent for the cosmetics company’s loan. The New York-based bank sued 10 firms that manage assets for Revlon creditors after they refused to return the money, but Judge Jesse Furman said prior court decisions forced him to conclude that the lenders could keep it. While the bank is appealing the decision, a failure to overturn it leaves Citigroup responsible for the bulk of the almost $900 million remaining on the loan that Revlon hasn’t itself paid. Citigroup has now claimed rights as a Revlon creditor, and could seek repayment from the company if the ruling isn’t reversed.
