A Revlon Inc. shareholder group petitioned in bankruptcy court for the formation of an official equity committee, citing the continued buoyancy in the company’s stock price as evidence its shares still have value, WSJ Pro Bankruptcy reported. A minority shareholder group asked the court overseeing Revlon’s chapter 11 case to form an official committee to represent the interests of equity holders. The Justice Department’s bankruptcy division declined last month to form an equity committee, which would give shareholders an official voice in the chapter 11 case and put Revlon on the hook for their legal fees. Bankruptcy courts can order equity committees even after the Justice Department says no in situations where the interests of shareholders aren’t adequately represented. The stockholder group said Tuesday that Revlon might owe less than the $3.54 billion in bonds and loans it brought with it into bankruptcy. The beauty-products maker may not owe anything to lenders that were accidentally repaid in 2020 by their loan agent, Citigroup Inc., according to the shareholder motion. Lenders that were paid off by the bank returned roughly $385 million of that money to Citi, which has been fighting in federal court for nearly two years to claw back roughly $500 million more from other lenders. The shareholder group said it believes lenders that returned the money were under no obligation to do so “and therefore may not hold a valid claim against Revlon.” “Such a voluntary return of funds is effectively a gift,” the equity group said in Tuesday’s court filing. The shareholders also said that Citi’s inadvertent payoff “could be seen as ‘voluntary,’ thus canceling $500 million of debt.”
