Public RelationsUS lender CIT goes bankrupt despite $4.5 bn lifeline
CIT Group, one of the largest small-business lenders in the United States, has filed for bankruptcy, with its board approving a "prepackaged" restructuring plan to shed $10 billion in debt.
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After being rescued from an almost certain collapse in July following the US government"s rejection of a bailout plea, the company had struggled to stay afloat, receiving an emergency loan of $4.5 billion as recently as October 28.
But when a comprehensive debt-exchange plan failed last month, the board of the company, which ran into financial problems after a home mortgage meltdown plunged the country into its worst crisis in decades, began reorganising its capital structure ahead of a possible bankruptcy.
"With the overwhelming support of its debt-holders, the board of directors voted to proceed with the pre-packaged plan of reorganisation for CIT Group Inc and a subsidiary that will restructure the company"s debt and streamline its capital structure," the company said in a statement after the board met on Sunday.
CIT aims to emerge from court protection by the end of the year, it added.
"Under the plan, CIT expects to reduce total debt by approximately $10 billion, significantly reduce its liquidity needs over the next three years, enhance its capital ratios and accelerate its return to profitability."