Business finance company CIT Group may file for bankruptcy after bailout talks with the US Government failed to obtain any new TARP funding.
CIT Group (NYSE: CIT) has more than $60 billion in managed assets and is a leading participant in vendor financing, factoring, equipment and transportation financing, small Business Administration loans, and asset-based lending.
In 2008 CIT Group received TARP federal bailout money of $2.3 billion dollars, however the bailout wasn’t enough as its customers drew down hundreds of millions of dollars from their credit lines, creating the liquidity crisis that may now lead to bankruptcy. Credit rating firm Standard & Poor recently downgraded CIT Group’s credit rating to junk status.
The Wall Street Journal reported that the company hired advisers to help prepare for a possible bankruptcy filing at the weekend, although a debt exchange – in which lenders would forgive loans in exchange for a stake in CIT may be an alternative for the company.