CIT: BANKRUPT
November 2nd, 2009Oh CIT.
Via: Bloomberg:
CIT Group Inc., a 101-year-old commercial lender, filed for bankruptcy to cut $10 billion in debt after the credit crunch dried up its funding and a U.S. bailout and debt exchange offer failed.
CIT listed $71 billion in assets and $64.9 billion in debt in a Chapter 11 filing in U.S. Bankruptcy Court in Manhattan. The U.S. 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 bankruptcy “will allow CIT to continue to provide funding to our small business and middle-market customers,” said Chief Executive Officer Jeffrey Peek in a statement.
CIT, which filed the fifth-largest bankruptcy by assets, said it plans to exit quickly due to support from bondholders, who voted in favor of a so-called 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.
CIT has $1 billion from investor Carl Icahn to fund operations while it reorganizes. The credit line, to be drawn on until Dec. 31, will be a so-called debtor-in-possession loan. It also expanded its $3 billion credit facility by another $4.5 billion on Oct. 28.
The rumors of this have been flying about for at least three weeks now, and the shameful “elephant in the room” being ignored by this Bloomberg announcement is that clearly the workout with the biggest bond-holders and other creditors or affiliates has already been handled in backrooms & boardrooms before this was declared.
What’ll be interesting is to see how well the market reaction has been/will be “contained”.
Will tomorrow’s action be a contest between the firms in the box seats and the rabble in the peanut gallery?
I might just pop popcorn for breakfast in the morning…