Hans
11-02-2009, 11:35 AM
CIT Group Inc., one of the nation's leading funders of small and medium-sized businesses, filed for the fifth largest bankruptcy by assets in U.S. history Sunday as part of a reorganization plan that has the support of an overwhelming majority of debtholders.
CIT's position in the business world is crucial. It says it is the leading provider of factoring, a key element in the day-to-day financing of the retail industry. Its key role in shipping goods is illustrated by its statement that it is the nation's third-largest lessor of rail cars and the world's third-largest lessor of aircraft.
The company also said it has filed motions in the bankruptcy court to allow for the continued payment of employees, and to allow the company to pay vendors and other creditors in full.
Common shareholders, however, will be out of luck. CIT said all existing common and preferred stock will be cancelled upon emergence from bankruptcy protection. That would likely include preferred stock from the $2.3 billion in funding from the U.S. government's Troubled Asset Relief Program (TARP) the company received in its efforts to stay afloat.
CIT sought a second federal bailout in July but was rejected. It was then able to get a $3 billion loan from bondholders in order to stave off bankruptcy -- at least for a little while.
CIT shares were trading at 64 cents after hours Friday, having closing at 72 cents during regular trading hours. The stock traded above $60 as recently as 2007.
http://money.cnn.com/2009/11/01/news/companies/cit_group/index.htm?postversion=2009110118
CIT's position in the business world is crucial. It says it is the leading provider of factoring, a key element in the day-to-day financing of the retail industry. Its key role in shipping goods is illustrated by its statement that it is the nation's third-largest lessor of rail cars and the world's third-largest lessor of aircraft.
The company also said it has filed motions in the bankruptcy court to allow for the continued payment of employees, and to allow the company to pay vendors and other creditors in full.
Common shareholders, however, will be out of luck. CIT said all existing common and preferred stock will be cancelled upon emergence from bankruptcy protection. That would likely include preferred stock from the $2.3 billion in funding from the U.S. government's Troubled Asset Relief Program (TARP) the company received in its efforts to stay afloat.
CIT sought a second federal bailout in July but was rejected. It was then able to get a $3 billion loan from bondholders in order to stave off bankruptcy -- at least for a little while.
CIT shares were trading at 64 cents after hours Friday, having closing at 72 cents during regular trading hours. The stock traded above $60 as recently as 2007.
http://money.cnn.com/2009/11/01/news/companies/cit_group/index.htm?postversion=2009110118