US banking giant Citigroup has asked a federal court to force hedge fund Brigade Capital to return $ 176 million (£ 134 million).
The money is part of the $ 900 million the bank accidentally passed on to creditors of ailing cosmetics company Revlon.
The bank said it intended to send Brigade just $ 1.5 million to cover interest on a loan held by the hedge fund.
Citigroup attributes the accidental overpayment to an “operational error”.
In a filing in New York’s Southern District court, Citigroup said it intended to make interest payments on behalf of Revlon, but transferred amounts more than 100 times the size planned.
“When Citibank discovered the error, it quickly asked the beneficiaries to return its money,” the third largest US bank said on the file.
Citigroup was preparing to step down as an administrative agent for the Revlon loan when it accidentally transferred around $ 900 million to lenders last week amid a bitter fight between the cosmetics company and creditors.
Some of those who received the overpayments returned the money to Citigroup, while others, including Brigade, did not immediately return it.
Brigade was supposed to receive interest on a loan of $ 174.7 million, according to the complaint.
Instead, he received $ 176.2 million and refused to reimburse the funds “despite crystal clear evidence that the payments were made in error,” Citigroup said, noting that the money belonged to the bank and not to Revlon.
Revlon has been hit hard by the coronavirus pandemic and Brigade is one of the creditors who sued the company over its debt restructuring plans.
Citigroup declined to comment further on the matter. Brigade did not immediately respond to a request for comment from the BBC.