CIT Group files for fifth largest Bankruptcy protection in US history

In one of the largest bankruptcy filings in United States history, CIT Group, a lender to small and medium sized businesses announced it has filed for debt reorganization under chapter 11.

On November 1, 2009, CIT Group filed for Chapter 11 bankruptcy protection.

CIT Group, which has been around since 1908, hopes to significantly reduce its debt and emerge quickly from bankruptcy protection by the end of 2009.

Quoted in the Washington Post: "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," said Jeffrey M. Peek, CEO.

"We are enormously appreciative of the extraordinary support we have received from our many constituencies," continued Peek. "This market-based solution allows CIT to enter into the reorganization process well-prepared and positioned for a swift emergence."

Like so many other lenders, CIT depended on its borrowing power to service retail and manufacturing clients, but the financial crunch caused investors to tighten their guidelines and pull in their sources of funding.

CIT Group received 2.3 billion in TARP bail out money from the government, but was turned down for more in July, when it was determined that a collapse of CIT would not impede the economic recovery currently underway.

Under the bankruptcy plan, there are no guarantees for the company’s long term survival even after emerging from reorganization.

CIT has a long and colorful history.

During World War II, the company closed its operation in Germany and owner Arthur O. Dietz, offered its 2000 employees a month's bonus, life insurance, and a guaranteed job on return if they served in the armed forces.

World War II didn’t bring the company down, but the recession of 2008 just might.

It is still undetermined if the government will regain the 2.3 billion in CIT’s reorganization.

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