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CIT Files for Chapter 11

NEW YORK CITY-With total assets coming to about $71 billion, this makes this bankruptcy the fifth-largest in US history.

By Ryan Clark | Updated on November 01, 2009

NEW YORK CITY-CIT Group filed for Chapter 11 Sunday in the US Bankruptcy Court here. The filing will reduce the lender’s total debt by $10 billion. With a total filing for approximately $71 billion this registers CIT Group as the fifth-largest bankruptcy in US history with the dubious honor of placing between General Motors’ $91.5-billion Chapter 11 and Enron’s $65.5-billion filing.

“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 U.S. economy,” chairman and CEO Jeffrey M. Peek says in a statement.

The lender’s financials took a dive as more and more of its loans defaulted, leaving it a lender with an inability to lend. The mounting debt topped out around $31 billion. CIT then expanded its senior secured credit facility by $4.5 billion maturing in 2012, mostly from bondholders.

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