If you were accidentally sent money intended for someone or something else, the right thing to do would be to send it back, right? There are laws in place to prevent people from misusing these types of accidental transfers, but it seems that Citibank has found themselves in a sticky situation where they are most likely out $500 million.

Advertising

This took place last year where Citibank, who was acting as Revlon’s loan agent, intended to send out $8 million in interest payments to Revlon’s lenders. However, through a massive blunder, they sent out $900 million, which included $175 million to a hedge fund. Obviously the bank wants their money back, but a judge has ruled that they can’t get it back legally.

Some of the lenders did return the money, but some did not and they are now on the hook for $500 million. This is because over in New York, there is something called “discharge-for-value-defense”. This basically states that if the beneficiary is entitled to the money and did not know it was a mistake, they can legally keep it. According to Revlon lenders, they claim that they thought that the money sent to them were prepayments for a loan.

They even claim that the money sent was the exact amount down “to the penny”, even though the loan wasn’t set to mature for some time. It’s not champagne all around just yet because Citibank can still appeal, and there is also a restraining order in effect.

Filed in General. Read more about and . Source: edition.cnn

Related Articles on Ubergizmo