CIT to File for bankruptcy

Photo by lprole

CIT has been unable to convince bondholders to finance more of their debt. This coupled with the fact that investors would lose money on the a pre-packaged bankruptcy, including the U.S., has caused the company to seek bankruptcy protection. The U. S. stands to lose $2.3 billion and opted not to supply more funds.

The only investor which seems to gain anything from this is Goldman Sachs, who will keep open its $2.3 billion loan in spite of the bankruptcy filing. CIT received a $4.5 billion dollar loan which will keep the company going during the bankruptcy proceedings and will not put the retailers at risk during the holiday season. CIT expects to emerge from this filing in a stronger position.

Many retailers have either gone out of business or cut back on their current operations as a result of the problems which CIT has had during the economic crisis. Retailers have depended on their support for factoring loans to purchase inventory. Many retailers, as a result are relying on their own money to keep their businesses open.