CIT Could Emerge From Chapter 11
The United States Bankruptcy Court for the Southern District of New York confirmed CIT Group’s prepackaged plan of reorganization on Dec. 8. The company anticipates emerging from bankruptcy on Dec. 10, according to a statement released by the commercial lender.
The reorganization plan will reduce CIT’s total debt by approximately $10.5 billion and defer debt maturities for three years. The plan will also improve capital ratios “to levels that exceed regulatory requirements,” according to the company.
“As a result of the overwhelming support for our plan, CIT now has a stronger capital structure and improved liquidity profile,” said CIT Chairman and Chief Executive Officer Jeffrey M. Peek. “Our board of directors and management team now have the time and flexibility to execute the balance of CIT’s restructuring strategy, including maximizing the value of its existing assets and optimizing the business model.”
CIT is the largest factor to the apparel industry and the company’s financial troubles have been closely watched by apparel manufacturers and retailers for the past year. CIT acknowledged its position as lender to many small businesses.“CIT’s market-leading positions are derived from our strong relationships with one million small business and middle-market customers,” Peek said. “We are committed to continue lending to these vital sectors, which will help support much needed job creation and contribute to the recovery of the U.S. economy.”
Once out of bankruptcy, CIT plans to commit $500 million to support its Small Business Lending group and $1 billion in funding for its Vendor Financing operating segment. The company said these funds are in addition to a previously announced commitment of $1 billion in funding for its Trade Finance operating segment, which factors mid-sized companies.
The company will also continue restructuring its board of directors, which will ultimately include 13 directors, including seven new independent directors, who will be named by the company’s debtholders, five continuing directors and a new CEO.—Alison A. Nieder
