CIT Group Proceeds With Reorganization
The Board of Directors of New York City-based CIT Group Inc. -- a bank holding company that
provides financing to small businesses and middle market companies, including retail businesses and
textile manufacturers -- has voted to proceed with a prepackaged reorganization plan for CIT Group
and its subsidiary CIT Group Funding Co. of Delaware LLC. The plan will restructure the company's
debt and streamline its capital structure. None of CIT'S operating subsidiaries will be included in
the filings, so all operating entities are expected to continue normal operations while the cases
After receiving overwhelming support from its debtholders, with nearly 90 percent in favor of the plan, the company is asking the US Bankruptcy Court for the Southern District of New York for a quick confirmation of the approved plan, under which CIT expects to reduce debt by approximately $10 billion, significantly lessen its liquidity needs over the next three years, increase its capital ratios and speed up its return to profitability.
"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 Jeffery M. Peek, Chairman and CEO, CIT Group. "We are enormously appreciative of the extraordinary support we have received from our many constituencies. This market-based solution allows CIT to enter into the reorganization process well-prepared and positioned for a swift emergence."
Last July, 32 industry trade organizations signed a letter of support for CIT addressed to Treasury Secretary Timothy Geithner. Among the supporters was Kevin Burke, CEO of the American Apparel and Footwear Association, who said "A CIT bankruptcy could have a 'crippling' effect on manufacturers. There is no level in the supply chain that CIT Group does not touch, from the suppliers of thread and material to the manufacturer, to the retail shelf." Other supporters included Tracy Mullin, CEO, National Retail Federation, and Cass Johnson, president National Council of Textile Organizations.
November 3, 2009