Look at the bigger picture. The loan here was probably made originally by Citibank to Revlon, and then the loan was sold to Brigade. That's implied by the expected payment flow - Revlon to Citibank to Brigade. So Citibank was the loan originator, and when they sold the loan, became just the servicer of the loan. That's all quite common.
Citibank, by paying off Brigade, effectively bought the loan back. Something Citibank might choose to do under some circumstances, and may have the contractual option do to. If Revlon were not going broke, this would be a non-problem. Revlon still has the obligation to pay Citibank. Citibank would just have another loan on the books, and could hold onto it and collect the payments, or sell it off again.
Revlon is in trouble and trying hard to restructure their debt.[1] As a servicer, that wasn't Citibank's problem. Having accidentally bought the loan back, now it is.
This will probably all turn on the contract terms. Did Citibank have the option to buy back the loan from Brigade? Details like that.
I have a friend at a big law firm who deals with contract law messes like this. She's said that IPOs and startups are fun - everybody is happy and upbeat. In bankruptcies and workouts, everybody hates everybody else. No fun.
Citibank, by paying off Brigade, effectively bought the loan back. Something Citibank might choose to do under some circumstances, and may have the contractual option do to. If Revlon were not going broke, this would be a non-problem. Revlon still has the obligation to pay Citibank. Citibank would just have another loan on the books, and could hold onto it and collect the payments, or sell it off again.
Revlon is in trouble and trying hard to restructure their debt.[1] As a servicer, that wasn't Citibank's problem. Having accidentally bought the loan back, now it is.
This will probably all turn on the contract terms. Did Citibank have the option to buy back the loan from Brigade? Details like that.
I have a friend at a big law firm who deals with contract law messes like this. She's said that IPOs and startups are fun - everybody is happy and upbeat. In bankruptcies and workouts, everybody hates everybody else. No fun.
[1] https://www.bloomberg.com/news/articles/2020-05-04/revlon-wi...