Commercial Lender CIT Group Seeks Bankruptcy Protection After Bailout

Posted By on November 1, 2009

CIT Group Seeks Bankruptcy Protection After Bailout

By Tiffany Kary, Dawn McCarty and Lester Pimentel

Nov. 1 (Bloomberg) — CIT Group Inc., a 101-year-old commercial lender, filed for bankruptcy with financing from investor Carl Icahn after the credit crunch dried up its funding and a U.S. bailout failed.

New York-based CIT listed $71 billion in assets and $65 billion in debt, according to the filing. The company filed in the U.S. Bankruptcy Court for the Southern District of New York.

CIT has $1 billion from Icahn to fund operations while it reorganizes. The credit line, to be drawn on until Dec. 31, would be a so-called debtor-in-possession loan if the company enters bankruptcy, CIT said in a statement Oct. 30.

The company had asked bondholders to exchange $30 billion in debt for new securities and equity. Icahn made a competing offer. After CIT’s offer expired at midnight on Oct. 29, the company said it was tallying 150,000 ballots.

CIT said it would try to emerge from bankruptcy two months from the date of its filing.

Under the plan, the lender said it expects to cut total debt by about $10 billion, reduce its liquidity needs over the next three years and boost its capital ratios.

More at     http://www.bloomberg.com/apps/news?pid=20601087&sid=aGR8yTH2eLwY&pos=1

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