Post By Rico K Setyo
By Mike Spector and Kate Haywood
CIT Group Inc. plans to file for bankruptcy as soon as Sunday afternoon, said people familiar with the matter, in a high-stakes restructuring intended to keep the doors open at one of the U.S.'s largest small-business lenders.
CIT's board was meeting about the likely filing early Sunday afternoon, these people said, and the company expected to seek Chapter 11 protection in New York in a matter of hours. The lender expected to have considerable support from creditors for its "prepackaged" reorganization, which could allow CIT to have its plan approved quickly and emerge from bankruptcy by the end of the year, other people familiar with the matter said.
The filing comes after a previous debt-exchange offer made to CIT's bondholders failed. But CIT garnered broad support for a prepackaged bankruptcy, people familiar with the matter said.
The $2.3 billion in taxpayer money spent to save CIT is likely to be wiped out, as the lender prepares for the filing.
In a move smoothing its restructuring, the company said Friday that it had persuaded billionaire investor Carl Icahn to support its prepackaged bankruptcy plan. Mr. Icahn, who wanted to push CIT into liquidation, failed to persuade other bondholders to derail CIT's restructuring plan.
With $71 billion in assets, CIT would have the fifth-largest bankruptcy filing in U.S. history, trailing only those of Lehman Brothers Holdings Inc., Washington Mutual Inc., Worldcom Inc. and General Motors Corp. CIT's Utah bank, which has about $10 billion in assets, wouldn't be part of the bankruptcy filing.
Read More
This is by far terrible. This just shows that either the financial system hasn't learned from the past or the economy is not improving. This bankruptcy is going to cause a ripple effect.
ReplyDelete--Lisa Matthys