Morgan Stanley makes big bet on meme-stock Revlon


David Randall
Mon, August 15, 2022 

Revlon products are seen for sale in a store in Manhattan, New York City

By David Randall

NEW YORK (Reuters) - Shares of bankrupt cosmetics company Revlon Inc soared nearly 27% on Monday after asset manager Morgan Stanley revealed in a filing that it purchased 400,650 shares in the company over the last quarter.

The purchase increased Morgan Stanley's stake by approximately 1,793%, according to its filing, known as a 13-f.

Shares of Revlon are up 582% from their mid-June low, boosted by hopes the company can replicate the success of shareholders in car-rental company Hertz, who were handsomely rewarded when Hertz was rescued from bankruptcy by a group of investors.

Revlon's rebound has come alongside rallies in other so-called meme stocks popular with retail investors such as AMC Entertainment Holdings Inc and GameStop Corp, which were hit hard in the first half of the year.

Revlon filed for Chapter 11 bankruptcy in June after saying that its high debt load left it too cash-poor to make timely payments to vendors. The company received approval for a $1.4 billion bankruptcy loan on Aug. 1 despite objections from its official creditors committee, which called the company a "mess" in a court filing.

Despite the recent rally, Revlon's shares are down 30% for the year-to-date.

(Reporting by David Randall; Editing by Leslie Adler)

Citi Sues Revlon Over Lender Status After $900 Million Mistake

Jeremy Hill Mon, August 15, 2022 

(Bloomberg) -- Citigroup Inc. has sued Revlon Inc. in a bid to resolve a nagging legal question that emerged after the bank mistakenly wired $900 million to the cosmetics giant’s lenders and intensified after Revlon filed for bankruptcy.

When Citi accidentally sent $900 million to Revlon lenders in August 2020 and later failed to get most of it back, the bank said it became a lender to Revlon, effectively stepping into the shoes of funds who refused to return about $500 million of the mistaken payment. But Revlon has since hinted that it may challenge Citi’s status as a creditor, prompting Citi to file suit in bankruptcy court Friday.

Citi is asking Revlon’s bankruptcy judge to dispel any doubt about its right to repayment under the Revlon term loan. Because it had no obligation to pay down Revlon’s debt, denying the bank its rights as a creditor would let Revlon “escape liability for its own debt obligations,” lawyers for Citi wrote in the complaint.

The bank was not aware that anyone would challenge its status as a creditor until days before the cosmetics company filed for Chapter 11 protection in June, according to court papers. It was then that Revlon and some of its creditors refused to acknowledge the bank’s rights as a secured lender in the company’s bankruptcy financing package.

“Unsurprisingly, neither the Revlon Group nor any other party-in-interest had ever articulated any legitimate legal or factual basis for challenging Citibank’s subrogation rights for inclusion in the DIP Orders,” lawyers for Citi wrote. “There is none.”

Representatives for Revlon didn’t immediately respond to a request for comment Monday.

The bankruptcy case is Revlon Inc., 22-10760, U.S. Bankruptcy Court for the Southern District of New York (Manhattan).