A court ruling has stopped Citibank, an American multinational investment bank from recovering about half a billion dollars it accidentally wired to embattled cosmetics firm Revlon's lenders. The bank which is Revlon's loan agent, was supposed to send about $8 million in interest payments to the cosmetic company's lenders. Instead, Citibank accidentally wired almost 100 times that amount, including $175 million to a hedge fund. In all, Citi accidentally sent $900 million to Revlon's lenders. Citibank itself did not realize the magnitude of its mistake until nearly a day later. Some of the lenders returned about $400 million, while 10 asset managers refused to return the transferred money. Citibank filed a lawsuit in August seeking the return of its funds, but it still has not received $500 million from 10 investment advisory firms after the accidental transfer. The 10 lenders in the case were Brigade Capital Management, HPS Investment Partners, Symphony Asset Management, Bardin Hill Loan Management, Greywolf Loan Management, ZAIS Group, Allstate Investment Management Company, Medalist Partners Corporate Finance, Tall Tree Investment Management and New Generation Advisors. However on Tuesday February 16, a U.S. District Judge Jesse Furman ruled in favour of the 10 investment advisory firms that collectively received the money. Though the law usually punishes those who spend money accidentally deposited in their accounts, New York law has exceptions to this rule, known as the "discharge-for-value-defense." If the beneficiary is entitled to the money and did not know it was accidentally wired, they can keep it. Revlon lenders said they believed Citibank was wiring prepayments for a loan. They affirmed that the money accidentally wired was the exact amount "to the penny" Citibank owed them, although the loan wasn't set to mature for quite some time. The court ruled the lenders were justified in believing the payment was intentional. The court document added; "To believe that Citibank, one of the most sophisticated financial institutions in the world, had made a mistake that had never happened before, to the tune of nearly $1 billion — would have been borderline irrational." The judge's ruling used internal chats between HPS employees as further proof the creditors had no idea the wiring was a mistake until after Citibank sent notices. In the chat, which was dated a day after the mistaken wiring, HPS employees joked about the error. Since an appeal is a possibility, a temporary restraining order is still in effect. A Citibank spokesperson told Forbes Tuesday that the bank will appeal the judgement. The spokesperson said; “We strongly disagree with this decision and intend to appeal, we believe we are entitled to the funds and will continue to pursue a complete recovery of them.”The post Court rules that Citibank can't recover $500 million it mistakenly transferred to client's lenders appeared first on Linda Ikeji Blog.