CIT Group Inc. files for 5th largest bankruptcy in US
CIT Group which is one of the leading US funders for medium sized and small ventures filed for the bankruptcy on Sunday which is 5th largest by assets in America’s history. They have planned a reorganization that has the support of its major debtholders.
The group has asked the US Bankruptcy Court for the Southern District of New York for a quick approval for its plan. They said that its subsidiaries will continue its operations and would not be affected by the filing.
Jeffrey M Peek, Chairman of the group said, “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”.
The assets shown in the bankruptcy filing are $71 billion and $64.9 billion in liabilities. The other 4 companies which had more assets when they filed for protection are Lehman Brothers, Washington Mutual, Worldcom and General Motors.
Separately, the company said in a filing with the Securities and Exchange Commission on Friday that it had struck an agreement with Goldman Sachs to change the terms of a loan it had originally sought from the Wall Street firm in June.
In reducing the size of the loan to $2.125 billion from $3 billion, CIT Group will pay Goldman a termination fee of $285 million and will post $250 million in collateral.
In return, Goldman agreed not to terminate the credit facility in the event of a CIT bankruptcy. Prior to Friday’s announcement, Goldman Sachs was poised to collect $1 billion when CIT filed for bankruptcy, according to reports.