CIT Group Files Bankruptcy Under Debt Reduction Plan

November 2, 2009 by · 1 Comment
Filed under: Legal News 

No surprise that CIT is finally restructuring their debt, hopefully they can become a viable business finance company that can rely more on long-term financing then the more short and medium term financing.  According to Bloomberg, they are looking to refinance $10 billion dollars of debt.  This bankruptcy makes it the 5th largest in U.S. history at $71 billion dollars in assets against which it has $64.9 billion in liabilities.

CIT Group Inc., the 101-year-old commercial lender that saw its funding dry up in the credit crunch, filed for bankruptcy in an effort to cut $10 billion in debt following a failed debt exchange and U.S. taxpayer bailout.

CIT listed $71 billion in assets and $64.9 billion in liabilities in a Chapter 11 petition yesterday in U.S. Bankruptcy Court in Manhattan. The Treasury Department said the government probably won’t recover much, if any, of the $2.3 billion in taxpayer money that went to CIT.

The lender, which funds about 1 million businesses such as Dunkin’ Brands Inc. and Eddie Bauer Holdings Inc., plans to exit court protection next month after bondholders voted in favor of a “prepackaged” plan. None of CIT’s operating subsidiaries, including Utah-based CIT Bank, were included in the filing, and operations will proceed as normal, CIT said in a statement.

“Short term, it’s going to cause some difficulties for startups and smaller borrowers,” said Jean Everett, a partner at Hiscock & Barclay LLP focusing on financial institutions and lending. “CIT lent across so many sectors, it’s sort of difficult to predict how it’ll affect each sector.”

Source: Bloomberg

Comments

One Response to “CIT Group Files Bankruptcy Under Debt Reduction Plan”
  1. Peter L. Griffiths says:

    Financial opinion in the United States seems to think that what is good for banking must be good for the community. Banks have only one problem, defaulting borrowers. This defaulting borrowers problem of banking seems to have been completely ignored by the authorities largely because it is fiscal rather than monetary. The fiscal solution of this problem involves giving an annual $1500 housing benefit to all United States citizens in reduction of their bank overdrafts where appropriate.

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