Re:Judge: Citibank isn't entitled to $500M it sent to variou...
by MattGaiser on Thursday February 18, 2021 @10:56AM
(#26181326)
> That said, I don't understand why the creditor would want to hold onto the money. If they made a loan, they did so to make money off of interest payments, and if the loan is prepaid, they make less.
The borrower in this case is in financial decline, so they would not get the loan on those terms day. Imagine if you had a loan, lost your job, and then accidentally repaid the loan. The lender would be breathing a sigh of relief.
> Earlier in the year, as the pandemic was accelerating, Revlon experienced financial difficulties and sought to borrow more money. To do that, Revlon convinced a majority of its previous creditors to allow it to transfer collateral from its old loan to a new one.
> The strong-arm tactic angered the other creditors, who felt that the reduced collateral could leave them holding the bag if Revlon ran out of money. That's more than a theoretical concern: Bloomberg's Matt Levine reports that Revlon's debt is "trading at around 42 cents on the dollar." But under the terms of the loan, the minority lenders didn't have a way to force early repayment.
The borrower in this case is in financial decline, so they would not get the loan on those terms day. Imagine if you had a loan, lost your job, and then accidentally repaid the loan. The lender would be breathing a sigh of relief.
> Earlier in the year, as the pandemic was accelerating, Revlon experienced financial difficulties and sought to borrow more money. To do that, Revlon convinced a majority of its previous creditors to allow it to transfer collateral from its old loan to a new one.
> The strong-arm tactic angered the other creditors, who felt that the reduced collateral could leave them holding the bag if Revlon ran out of money. That's more than a theoretical concern: Bloomberg's Matt Levine reports that Revlon's debt is "trading at around 42 cents on the dollar." But under the terms of the loan, the minority lenders didn't have a way to force early repayment.