CIT Seeks Bankruptcy After $4.5bn Bailout
Commercial lender CIT Group Inc. (CIT) on Sunday confirmed weekend reports that it would proceed with a bankruptcy filing shortly after receiving its second multi-billion-dollar private capital bailout in just over three months. The move for bankruptcy restructuring garnered "overwhelming" support from CIT's debt-holders and board of directors, with 90% of both large and small voting debt-holders supporting the reorganization. The filing is the first step to restructuring CIT's debt and streamlining its capital structure. “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 US economy,” said CEO Jeffrey Peek in a statement Sunday. CIT is looking for quick confirmation of its filing by the court. The company expects to reduce its total debt by $10bn as well as significantly reduce its liquidity needs over the next three years, enhance its capital ratios and accelerate its return to profitability. "This market-based solution allows CIT to enter into the reorganization process well-prepared and positioned for a swift emergence," Peek added. The news of the filing came just days after CIT announced the expansion of an existing $3bn senior secured credit facility. The new $4.5bn private capital infusion, from a diverse group of lenders, arrived after the company turned down an offer from private equity investor Carl Icahn to provide CIT with a new $4.5bn term loan. The private bailout will enable CIT to meet its short-term obligations. CIT also secured an incremental $1bn committed line of credit to provide supplemental liquidity during bankruptcy processing. Write to Diana Golobay.