Alright, there are more than a few contenders to the title of the world’s least unexpected bankruptcy filing (not least Woolworths, or Thornburg Mortgage), but CIT has to be up there.
On Friday, CNBC reported the deeply troubled consumer lender would file for Chapter 11 bankruptcy protection on Sunday night. If it does, no one will be surprised.
Consider these recent headlines:
- CIT would be the fourth-largest bankruptcy in US history – FT Alphaville, July 14
- Lender CIT faces bankruptcy filing – FT, July 16
- CIT death plunge – FT Alphaville, July 16
- CIT Bond Advisers Said to Push for Bankruptcy After August Swap – Bloomberg, July 22
- CIT in Last-Ditch Rescue Bid – WSJ, Oct 1
- CIT debt swap struggles, bankruptcy looms – Reuters, Oct 12
Obviously, if and when CIT finally bites the bullet there will be repercussions – on the CDO market, on Goldman Sachs, on the US taxpayer and crucially, on legions of small businesses already facing sharp reductions in their access to credit.
But no one will be able to claim they didn’t see this one coming.
[UPDATE 17:35 UK] The will-they won’t-they game continues. The lender released the following statement on Friday:
CIT Enters into Restructuring Plan Support Agreement with Carl Icahn and Obtains Incremental $1 Billion Committed Line of Credit from Icahn Capital LP
NEW YORK–(BUSINESS WIRE)–Oct. 30, 2009– CIT Group Inc. (NYSE: CIT), a leading provider of financing to small businesses and middle market companies, today announced that it has entered into an agreement with Carl Icahn to support its restructuring plan and secured an incremental $1 billion committed line of credit from Icahn Capital LP to provide supplemental liquidity for CIT as it pursues that plan.
This new line of credit may be drawn by the Company on or prior to December 31, 2009, subject to definitive documentation and other customary conditions, and may be drawn as debtor-in-possession financing in the event of bankruptcy. Together with CIT’s $4.5 billion expansion facility, announced on October 28, 2009, and other available sources of liquidity, the line of credit will further enhance CIT’s liquidity during the execution of its restructuring plan and ensure its ability to serve its existing small business and middle market customers.
Related links:
CIT spurns Icahn and accepts rival loan – FT
Goldman Sachs Trims CIT Loan to $2.12bn – Reuters