CIT files for bankruptcy

Jennifer McClelland | RSS | Mon, Nov 02 2009 | 0 Comments

It has been teetering on the edge for a few months now, but yesterday CIT made it official when it filed for bankruptcy protection. The decision to file for bankruptcy was approved by the creditors of the company along with the board of directors. At the time of the filing CIT had assets of $71 billion and liabilities of $65 billion.

This filing is one of the largest. The only ones that have been larger are the bankruptcy filings from Lehman Brothers, General Motors, as well as Enron.

CEO Jeffrey M. Peek said in a prepared statement, “The decision to proceed with our plan of reorganization will allow CIT to continue to provide funding to our small business and middle market customers, two sectors that remain vitally important to the U.S. economy.”

Just the lending sector was affected by the bankruptcy filing. The operating subsidiaries are not part of the filing and the company has every intention of keeping them running.

So, I suppose this means that we won’t be seeing the money that we lent to the company last year through the TARP funds. Last December, CIT took $2.3 billion from the funds; this will be the biggest loss the Treasury Department has had since it began handing out money to troubled banks.

CIT is a lender to mostly commercial businesses.

Source

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Tags: bankruptcy filings, troubled banks, prepared statement