Citigroup accidentally wired $900M to Revlon's lenders — a court let them keep it

On August 11, 2020, Citigroup — the administrative agent for a $1.8 billion loan to Revlon — was supposed to send the cosmetics company's lenders about $8 million in interest. Instead, a botched entry in the bank's Flexcube payment software sent roughly $900 million of loan principal to a group of those lenders. The payment screen offered several ways to route the money; the operator set it to repay principal to the lenders rather than pay interest on their behalf, and the system executed the wire without catching the difference.

Some lenders returned the windfall. Three — Brigade Capital Management, HPS Investment Partners and Symphony Asset Management — refused. Citigroup sued in New York federal court, and in February 2021 Judge Jesse Furman delivered a stunning ruling: under New York's 'discharge for value' doctrine, the lenders were entitled to keep the money to offset the debt Revlon still owed them. The decision was reversed on appeal in September 2022, when the Second Circuit ordered the funds returned.

Separately, in October 2020, US regulators fined Citigroup $400 million and ordered it to overhaul its risk-management and payment technology, citing the very control failures that let the wire slip through. The episode became a textbook case in how a confusing payment interface plus straight-through processing can move nine figures before anyone notices.