13 ms·

I think the law envisions a case where you owe money to someone, and the due date for repayment is already in the past. So, if I borrow $1,000 from you and am

by jawns 6y ago

I think the law envisions a case where you owe money to someone, and the due date for repayment is already in the past. So, if I borrow $1,000 from you and am supposed to pay it back next month, and then the due date arrives, and I accidentally transfer $1,000 to you, then yeah, it makes sense that you should be able to keep the money you are owed, even if it was sent mistakenly. It would be bizarre to demand that the creditor return the money to a debtor who is at risk of stiffing them. But in this case, the due date for repayment was far in the future, and it makes far less sense for the exception to come into play. 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. EDIT: I read more about the lawsuit. In most cases, it doesn't make sense for the creditor to want to hold onto the money. But in this case, the creditors were on bad terms with the debtor and were worried that if they returned the erroneously transferred money, they might never see it paid. So the exception to the law, which seems unnecessary unless the loan is past due, ended up benefiting them, because they got their at-risk loan paid back.

MattGaiser 6y ago
> 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.
meetups323 6y ago
> 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 article mentions the creditor's impression of the company soured over time, and further their debt was trading for 42c on the dollar. So they got a nice little >2x return on expected value.
avalys 6y ago
In this case - the creditors all expected it was likely that Revlon would default on the loans and never pay them back in full (let alone interest). And there were active lawsuits between the creditors and Revlon regarding financial maneuvering Revlon was doing around these loans that would make it even less likely.
forgingahead 6y ago
Creditor doesn't necessarily mean bank lender. If you're Revlon, and I supply you raw materials (like beeswax used in lipstick) with standard 30 days payment terms, I am also considered as your creditor because you owe me money. There is no interest expected, rather this is typical of doing business and how firms expect their suppliers to give them payment terms of 30 days, 60 days, or in many cases I've seen, 6 to 9 months. And yes, in Revlon's creditors' case, or in the case of any business who supplies goods on credit, the pandemic absolutely made you panic over whether you could depend on receiving all the money that is owed to you. In any case, I doubt this ruling will stand, they are a huge bank and this is a decent chunk of change. They've got their ways to making sure the appeal goes in their favour.
- user5994461 6y ago
  >>> In any case, I doubt this ruling will stand I think it could easily stand for this specific case. The loan was supposed to be repaid by 2023 if I read the article correctly. It's already 2021, the case could very easily drag for another 2 years, then there is no reason to return any money because it was supposed to be paid. The other party are other banks and hedge funds could can hold the money and can also afford lawyers.

by jawns 6y ago

MattGaiser 6y ago

> 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.

meetups323 6y ago

> 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 article mentions the creditor's impression of the company soured over time, and further their debt was trading for 42c on the dollar. So they got a nice little >2x return on expected value.

avalys 6y ago

In this case - the creditors all expected it was likely that Revlon would default on the loans and never pay them back in full (let alone interest). And there were active lawsuits between the creditors and Revlon regarding financial maneuvering Revlon was doing around these loans that would make it even less likely.

forgingahead 6y ago

Creditor doesn't necessarily mean bank lender. If you're Revlon, and I supply you raw materials (like beeswax used in lipstick) with standard 30 days payment terms, I am also considered as your creditor because you owe me money. There is no interest expected, rather this is typical of doing business and how firms expect their suppliers to give them payment terms of 30 days, 60 days, or in many cases I've seen, 6 to 9 months. And yes, in Revlon's creditors' case, or in the case of any business who supplies goods on credit, the pandemic absolutely made you panic over whether you could depend on receiving all the money that is owed to you. In any case, I doubt this ruling will stand, they are a huge bank and this is a decent chunk of change. They've got their ways to making sure the appeal goes in their favour.

user5994461 6y ago
>>> In any case, I doubt this ruling will stand I think it could easily stand for this specific case. The loan was supposed to be repaid by 2023 if I read the article correctly. It's already 2021, the case could very easily drag for another 2 years, then there is no reason to return any money because it was supposed to be paid. The other party are other banks and hedge funds could can hold the money and can also afford lawyers.