CIT failure to leave small businesses floundering

[Joanne98]

Source: Reuters

NEW YORK (Reuters) - CIT Group Inc's bankruptcy filing, while long expected, could still trigger a financing crunch for many of the hundreds of thousands of small businesses it finances.

CIT filed for bankruptcy protection on Sunday, and said its creditors have already approved the century-old commercial lender's reorganization plan.

The bankruptcy followed a failed struggle to refinance its debt amid the credit crunch and recession, and paves the way for it to restructure.

Under the plan announced on Sunday, the lender expects to reduce total debt by about $10 billion.

But the company's long-term prospects are uncertain and the bankruptcy could leave more than one million small and medium-sized businesses looking for another source of funding, lawyers said.

"This could have a devastating effect," said Jerry Reisman, a partner at law firm Reisman Peirez & Reisman in Garden City, New York, who has been working with many of CIT's factoring clients.

These clients -- about 2,000 small companies -- are in a particular bind when it comes to finding alternative financing since CIT is by far the biggest provider of factoring services.

In the factoring business, CIT buys accounts receivables from vendors that range from $5 million to $1 billion in size and then works with their customers to ensure payment.


Read more: http://www.reuters.com/article/topNews/idUSTRE5A01T820091101

[Joanne98]

1. We also lose the 2.3 billion in TARP money we gave them.

CIT's bankruptcy will likely mean that the Treasury Department loses the $2.3 billion it invested in the company -- the biggest loss from TARP so far.

http://www.marketwatch.com/story/citto-file-for-bankruptcy-after-rescues-fail-2009-11-01

[SpiralHawk]

2. The putrid fruit of Republiconomics

And RepubliconThink...

Thanks a pantload, 'conservative' Republicons...

[Ichingcarpenter]

3. Criminal Bankers

One day you will get it.

[Ruby the Liberal]

4. Bring in the wrecking ball

Nooooo, we couldn't nationalize the bastards.

Well, fine.

Break them into microscopic pieces and sell them off to the highest bidder.

Which we all know will be Goldman Sachs, hat in one hand and with a blank check from the Treasury in the other...

[optimator]

5. 2.3 billion could have paid for a lot of healthcare

instead of flushing it down the toilet

[AnOhioan]

6. CIT files for Chapter 11 bankruptcy protection

Source: Associated Press

WASHINGTON -- After struggling for months to avert bankruptcy, lender CIT Group has filed for Chapter 11 protection in an attempt to restructure its debt while trying to keep badly needed loans flowing to thousands of mid-sized and small businesses.

CIT made the filing in New York bankruptcy court Sunday, after a debt-exchange offer to bondholders failed. CIT said in a statement that its bondholders overwhelmingly opted for a prepackaged reorganization plan which will reduce total debt by $10 billion while allowing the company to continue to do business.

The Chapter 11 filing is one of the biggest in U.S. corporate history, following Lehman Brothers, Washington Mutual, WorldCom and General Motors. CIT's bankruptcy filing shows $71 billion in finance and leasing assets against total debt of $64.9 billion.

A prepackaged bankruptcy, which has the support of major bondholders, speeds up the process of restructuring CIT's debt and could allow it to exit court protection by the end of the year. In addition to reducing its debt, CIT said the plan cuts cash needs over the next three years, which should help it return to profitability more quickly.

Read more: http://www.cleveland.com/business/index.ssf/2009/11/cit_files_for_chapter_11_bankr.html

[orbitalman]

7. CIT was my mortgage holder.

Until about 3 years ago. My loan was in the beginning of foreclosure which was then shredded and sold to whomever replete with the foreclosure. NOW. Who would buy a mortgage foreclosed unless they were lied to or unless the buyer had some OTHER UNDERLYING reason to purchase it? These big money boys aren't making sense to me at all. I think they are technically criminal.

[Piewhacket]

8. Seriously, check out the MERS problem with 60 million mortgages.

[countmyvote4real]

9. CIT was good to me.

I had to take out a loan for some dental work at my local dental school. I'm in NYC. The loan was offered and initiated by CapitalOne. I chose a plan that was aggressive in repayment and low on interest rate and it was within my means at the time. II think it was around 1.5% over 18 months.) After one or two months billing from CapitalOne, I received a notice that the loan was now being handled by CIT.

I thought that I was fucked and was going to be tripped up by the least little thing. Consequently, I was active in my communication with the new holder (CIT) if I ever thought a payment might be posted a day or two late. In the process I was informed that there was a 5 business day grace period beyond the due date. Plus, I could see my account balance online. (Scooby-Doo moment) They never pulled fees on me. And I never gave them an opportunity.

Sorry to see them fail. They were decent enough to cover me when it wasn't worth CapitalOne's time/low APR.

[T_i_B]

10. Kick

:kick: :-(

[Odin2005]

11. This is really, really bad.

:scared:

[xchrom]

12. kick