CIT Group emerges from bankruptcy

Search continues for new CEO

Heath E. Combs, December 16, 2009

CIT Group, the furniture industry lender which filed a prepackaged Chapter 11 bankruptcy reorganization plan last month, has emerged from bankruptcy.
The company said its reorganization plan was approved by the U.S. Bankruptcy Court for the Southern District of New York.

CIT Group said distribution of new debt and equity securities had taken place and that its new common stock has begun trading on the New York Stock Exchange. The previous common and preferred stock was canceled.

CIT Group filed for protection in November in an effort to wipe away billions of dollars of debt after bondholders rejected an alternative debt-swap offer.

In its Chapter 11 petition, the company listed $71 billion in assets and $64.9 billion in liabilities.

None of CIT's operating subsidiaries, including its factoring division that services the furniture industry, were involved in the prepackaged filing.
CIT said the new plan reduces the company's debt by about $10.5 billion, defers debt maturities for three years, and enhances its capital ratios.

"CIT now has a stronger capital structure and improved liquidity profile. Our board of directors and management team now have the time and flexibility to execute the balance of CIT's restructuring strategy," Jeffrey Peek, chairman and CEO, said in a press release.

Peek announced earlier this year that he would resign Dec. 31. The company is continuing to search for a new CEO.

CIT also said that when it emerges from bankruptcy, it will commit $500 million to fund loans to Small Business Administration lending programs and $1 billion to its vendor financing unit, in addition to a previously announced $1 billion for its Trade Finance unit.

CIT Group lost access to certain commercial paper markets because of credit downgrades in 2008. That led it to draw down several revolving credit facilities, which eventually led to the bankruptcy filing.

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