CIT Group Seeks Debt Swap to Restructure
Bankruptcy Possible
By Furniture Today Staff -- Gifts and Dec, 10/1/2009 8:26:00 AM
New York — CIT Group, a major lender to the furniture industry through its factoring arm, is seeking a deal with bondholders to swap near-term debt for new debt and equity, or to file a pre-packaged bankruptcy if that plan falls apart, according to several reports.
The company – one of the nation's largest lenders to small businesses – is working to meet a restructuring plan deadline at the end of the day today, according to The Washington Post. The proposed exchange would reduced CIT's $30 billion in debt by about 30 percent, and would give bondholders a majority equity stake, the Post said.
But Bloomberg said the proposed debt exchange could end up pitting bondholders against each other and could nearly wipe out holders of CIT stock. It also noted that CIT is proposing that debt holders vote on a pre-packaged bankruptcy plan in case the debt exchange fails.
The company's stock price dropped 45 percent on Wednesday to close at $1.21.
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