CIT Group Files for Chapter 11

CIT Group Inc. filed for bankruptcy protection Sunday in an attempt to restructure its debt while keeping loans flowing to the thousands of small and midsize businesses it funds. It is the fifth-largest bankruptcy in U.S. history. Billionaire investor and bondholder Carl Icahn will provide the century-old commercial lender with $1 billion in funds while the company restructures. CIT’s move will wipe out holders of its common and preferred stocks, meaning the government will most likely lose the $2.3 billion it pumped into the company last year before declining the lender more funds. Chief Executive Jeffrey Peek said that the bankruptcy “will allow CIT to continue to provide funding to our small-business and middle-market customers.” CIT had requested bondholders to exchange $30 billion in debt for new securities and equity, but the company's debt holder rejected the offer. The company hopes to emerge from bankruptcy within two months.