New York (CNN Business) – After making one of the “biggest mistakes in banking history,” Citibank will not be able to recover the nearly $ 500 million it has mistakenly transferred to Revlon’s lenders, according to a US District Court judge.

Citibank, as Revlon loan officer, had intended to send about $ 8 million in interest payments to the cosmetics firm’s lenders. Instead, Citibank transferred nearly 100 times that amount, including $ 175 million into a hedge fund. In all, Citi accidentally sent $ 900 million to Revlon’s lenders.

Citibank filed a lawsuit in August asking for its money to be returned, but it has yet to receive $ 500 million from 10 investment advisory firms after the accidental transfer.

Citibank’s case, an exception to the rule

The law generally penalizes those who mistakenly spend money deposited into their accounts. Incidental transfers are common in the digital age and cables can be recovered instantly. A Pennsylvania couple faced criminal charges after accidentally spending money deposited into their account.

But New York law has exceptions to this rule, known as the “layoff defense of value.”

If the recipient is owed the money and he does not know that it was transferred in error, he can keep it. Revlon’s lenders said they believe Citibank is extending prepayments on a loan. After all, the money mistakenly transferred was the same amount Citibank owed, although the loan will not be due for some time.

“We are very pleased with the judge’s thoughtful, complete and detailed decision [Jesse] Benjamin Finston, who represented the lenders, Brigade and HPS Investment Partners.

Semi-irrational

The court ruled that the lenders were justified in believing the payment was intentional. Citibank itself didn’t realize the scale of its mistake until about a day later.

“The belief that Citibank, one of the most advanced financial institutions in the world, has made an unprecedented mistake of nearly a billion dollars,” the court document said, “would be irrational.” The judgment used internal conversations between HPS employees as further evidence that creditors had no idea the transfer was in error until Citibank sent out notifications. In the chat, dated a day after the failed transfer, HPS employees joked about the error:

DFREY5: I feel bad for the person who sent the wrong amount of 900mm. Not a great career movement

Grapinuit 12: It sure looks like they’ll be looking for new people for their line of operations

DFREY5: How was work today, dear? It was fine, except that I accidentally sent $ 900 million to people who were not supposed to get it

DFREY5: The Drawbacks of Working From Home. Maybe hit the dog at the keyboard

Lenders cannot take the money and run it. As an appeal is possible, the temporary injunction remains in effect.

We completely disagree with this decision and intend to appeal. “We believe we are eligible to receive the funds and we will continue to seek a full recovery from them,” Citigroup said in a statement.

The pandemic has hit brands like Revlon, whose shares are trading more than 40% less than last year.