Noah Feldman, Columnist

A Crazy Debt Repayment Rule Just Cost Revlon $900 Million

Laws letting creditors keep mistaken payments are outdated.

February 16, 2021 at 6:04 PM UTC

Noah Feldman is a Bloomberg Opinion columnist. A professor of law at Harvard University, he is author, most recently, of “To Be a Jew Today: A New Guide to God, Israel, and the Jewish People."

$900 million is a lot of lipstick.
Photographer: Bloomberg

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Federal district court judge Jesse Furman has issued his ruling in the Citigroup-Revlon lawsuit involving a $900 million mistake. Due to human error, Citigroup employees made debt payments to Revlon’s creditors that Revlon didn’t intend for them to make. Remarkably, Furman ruled in favor of the creditors, who won’t have to give back the money it received in error. Citigroup and Revlon will now have to eat the costs of the bank’s mistake.

The outcome is fascinating as an instance of strict judicial rule following. As Furman framed his opinion, the legal rule was clear: Under New York law, a creditor can keep a mistaken payment as long as he has “no knowledge” that it was sent in error.