CIT Group, Inc. files for Chapter 11 Protection
On Sunday, November 1, CIT Group, Inc. filed a prepackaged chapter 11 petition under which it will continue its core small- and midsize-business lending activities while attempting to regain its financial footing. CTI was the beneficiary of $2.3 billiion in taxpayer bailouts that will likely be discharged in bankruptcy. The lender gained the support of approximately 90 percent of its voting debt-holders for a plan allowing it to emerge from bankruptcy, possibly before year-end, while erasing around $10 billion of the $30 billion in debt now on its balance sheet.
This will be a test of CIT’s ability to move through the bankruptcy process while maintaining the trust of its constituents. Typically, lenders have not fared well in bankruptcy, where perception of financial health is central to the business model.
