The difficulties stemming from jurisdictional matters in the $900 million payment error lawsuit brought by Citibank seem to be resolved. On December 8, 2020, Judge Jesse M. Furman of the New York Southern District Court signed an order stating that the Court is prepared to proceed with trial.

Let’s recall that the lawsuit concerns wire transfers from August 11, 2020 regarding Revlon’s 2016 Loan. In 2016, Revlon acquired Elizabeth Arden, Inc. The deal was partially facilitated by a seven-year, $1.8-billion loan. Citibank serves as the administrative agent and collateral agent for the loan.

On August 11, 2020, several months of accrued interest came due under a credit agreement. The interest payment was to be processed by Citibank in its capacity as administrative agent. No other amount was due at the time, and Revlon transferred no additional funds to Citibank.

The interest payment was processed by Citibank on August 11, 2020. Due to issues with the loan-processing system, the payment to each lender was on average more than 100 times the interest that was actually due.

This operational mistake caused Citibank to transfer approximately $900 million of its own money to parties that were not entitled to it. When Citibank discovered the mistake, it promptly asked the recipients to return its money. Some recipients did return the money, but some did not. Now, the bank is trying to get the money back.

Early in December, the Court confirmed that a potential jurisdictional problem was discovered. This could have led to a dismissal of the case, but after a set of conferences and document exchanges, the issues appear to be resolved.

The order issued on December 8, 2020, says that the case can proceed to trial as to those seven defendants the parties have confirmed are completely diverse from the plaintiff. The Court outlined a set of requirements, such as Citibank having to filed an amended complaint properly alleging jurisdiction under the Edge Act, Section 1367, and Section 1332, with correct allegations with respect to each Defendants’ state(s) of citizenship, to the extent known. Citibank has complied with this requirement and filed the amended complaint several hours after the order was signed by the Judge.

The parties will also have to promptly complete their investigation into the citizenship of the remaining three defendants for which the parties remain uncertain of citizenship status. When that investigation is complete, the parties shall file a comprehensive list of all entities or persons whose citizenship is attributable to the defendants — that is, listing each member or partner of each LLC and LP and its state(s) of citizenship.