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07 February 2023

Bank Error in Your Favor: Lessons from the Citi/Revlon Mistaken Wire Transfer

Throughout the year, SS&C connects with our clients during engaging focus groups, conferences, and roundtable discussions, which have deepened our collaborative relationships and helped us to build trusted solutions. In January, we held the first, in a series of thought leadership discussions which we will host throughout the year. The objective is to bring together insights on relevant topics that matter to our community. Joined by practitioners from the Financial Times, Columbia Law School, and Sherman and Sterling LLP, our panelists discussed the lessons learned from the mistaken wire transfer Citi executed on behalf of Revlon.

What is this case about? 

In the summer of 2020, acting as Administrative Agent for the lenders on their loan to Revlon, Citi mistakenly paid down the outstanding principal balance of the $894 million loan several years early for the now-bankrupt cosmetics company, as opposed to making interest payments. Various lenders declined to return the funds, and Citi sued. After a bench trial, the trial judge ruled in favor of the lenders, but the appellate court disagreed.

The mistaken wire transfer and its aftermath

Representing a wide range of expertise, the discussion eloquently captured the details of this case. Beginning with a 30-thousand-foot view of the loan industry, the group explored the current landscape of debt restructuring for creditors and borrowers and how this environment precipitated what occurred. On the surface, this lawsuit is about a simple mistake due to operational challenges, but as you pull back the layers and review this from different vantage points, it becomes more complex.

After two years of proceedings, the matter is settled in the courts. However, this case sheds light on the archaic operational processes that exist for bank loans and is likely to have lasting ramifications for the industry. While this particular situation may not happen again, without incorporating stronger checks and balances for operational processes, there is a high likelihood that there will be more mistakes due to human errors.   

Stay tuned for more conversations

We’re excited to host a superb lineup of thought-provoking sessions curated for the alternative and asset management industry this year. Stay tuned as we plan for our next informative showcase.