Cit Group Bankruptcy: Chapter 11 petition

Over 100 years old CIT group Inc, the commercial lender saw its funding dry up in the credit crunch, filed for bankruptcy in an effort to cut $10 billion in debt. CIT listed $71 billion in assets and $64.9 billion in liabilities in a Chapter 11 petition yesterday at a U.S. Bankruptcy Court in Manhattan.

The government probably won’t recover much, if any, of the $2.3 billion in taxpayer money that went to CIT according to the Treasury Department. CIT funds over one million businesses such as Eddie Bauer Holdings Inc, said it plans to exit court protection quickly due to support from bondholders. Jean Everett, from Hiscock & Barclay LLP said “Short term, it’s going to cause some difficulties for startups and smaller borrowers.”

The lender, reported $3 billion of losses in the past eight quarters, received $2.3 billion from the Treasury on December 31st last year. The company tried to stave off bankruptcy with a $3 billion rescue loan from bondholders in July to see it through a cash crunch, arranged by Barclays Plc, included investors led by Newport Beach, California-based Pacific Investment Management Co. and Centerbridge Partners LP in New York.

To read more on this story go to bloomberg.com.