CIT Files for Bankruptcy

Posted on December 29, 2009


On Sunday, November 1, commercial and consumer lender CIT Group filed for Chapter 11 bankruptcy. According to The Washington Post, “CIT is the first firm to fail after being bailed out by the government.” In December 2008, CIT received 2.3 billion dollars from the government – money that will not be repaid.

Also wiped out in CIT’s bankruptcy filing are its shareholders. Bondholders voted for a prepackaged restructuring that should allow them to recoup about 70 cents on each dollar invested with the company.

A 101-year old financial institution, CIT funds nearly one million businesses as well as “about 2,000 vendors that supply merchandise to more than 300,000 stores” according to the Associated Press. The AP also notes that CIT’s filing “is one of the biggest in U.S. corporate history, following Lehman Brothers, Washington Mutual, WorldCom and General Motors.”

As a source of capital for many small and medium-sized businesses, struggles at CIT exacerbate an already difficult time for small business owners as cash and credit wells run dry. What this filing means for Main Street remains to be seen.

For more information:

CIT Files for Chapter 11 Bankruptcy Protection

Lender CIT Group Files For Bankruptcy

CIT Group’s $500 Million Loan Agreement Is Approved