US banking giant Citigroup has asked a federal court to force hedge fund Brigade Capital to return $176m (£134m).
The money is part of the $900m the bank accidentally transferred to creditors of the struggling cosmetics company Revlon.
The bank says it meant to send Brigade just $1.5m to cover interest on a loan the hedge fund holds.
Citigroup blames the accidental over-payment on an “operational mistake”.
In a filing to the Southern District of New York Court, Citigroup said it meant to make interest payments on behalf of Revlon but transferred amounts more than 100 times the size intended.
“When Citibank discovered the mistake, it promptly asked the recipients to return its money,” America’s third-largest bank said in the filing.
Citigroup was preparing to step down as the administrative agent for the Revlon loan when it accidentally wired roughly $900m to the lenders’ last week amid a bitter fight between the cosmetics company and creditors.
Some of those that received the over-payments have returned the money to Citigroup, while others, including Brigade, did not immediately give the money back.
Brigade was supposed to receive interest on a $174.7m loan, according to the complaint.
It instead got $176.2m and has refused to repay the funds “despite crystal-clear evidence that the payments were made in error,” Citigroup said, noting that the money belonged to the bank, not Revlon.
Revlon has been hit hard by the coronavirus pandemic and Brigade is one the creditors that has sued the company over its debt restructuring plans.
Citigroup declined to comment further on the case. Brigade did not immediately respond to a BBC request for comment.