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CIT Files Chapter 11, 76.5% Of Creditors Vote For Prepack (90% of 85% Voting)
NEW YORK--(BUSINESS WIRE)--CIT Group Inc. (NYSE: CIT), a leading provider of financing to small businesses and middle market companies, today announced that, with the overwhelming support of its debtholders, the Board of Directors voted to proceed with the prepackaged plan of reorganization for CIT Group Inc. and a subsidiary that will restructure the Company’s debt and streamline its capital structure.
Importantly, none of CIT’s operating subsidiaries, including CIT Bank, a Utah state bank, will be included in the filings. As a result, all operating entities are expected to continue normal operations during the pendency of the cases.
All classes voted to accept the prepackaged plan and all were substantially in excess of the required thresholds for a successful vote. Approximately 85% of the Company’s eligible debt participated in the solicitation, and nearly 90% of those participating supported the prepackaged plan of reorganization.
Similarly, approximately 90% of the number of debtholders voting, both large and small, cast affirmative votes for the prepackaged plan. The conditions for consummating the exchange offers were not met.
Accordingly, CIT’s Board of Directors approved the Company to proceed with the voluntary filings for CIT Group Inc. and CIT Group Funding Company of Delaware LLC with the U.S. Bankruptcy Court for the Southern District of New York (“the Court”).
Due to the overwhelming and broad support from its debtholders, the Company is asking the Court for a quick confirmation of the approved prepackaged plan. Under the plan, CIT expects to reduce total debt by approximately $10 billion, significantly reduce its liquidity needs over the next three years, enhance its capital ratios and accelerate its return to profitability.
“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, Chairman and CEO. “We are enormously appreciative of the extraordinary support we have received from our many constituencies. This market-based solution allows CIT to enter into the reorganization process well-prepared and positioned for a swift emergence. I want to thank our customers for their support and express my gratitude to our employees whose dedication and hard work are crucial to the future of CIT. We also acknowledge our constructive working relationship with our regulators and look forward to their continued guidance as we move through this process.”
For more than 100 years, CIT has provided much needed capital to small business and middle market customers. These two sectors play a vital role in the U.S. economy and in overall employment and job creation, representing more than 90 million employees. CIT is the leading provider of financing to the retail sector and to women-, minority- and veteran-owned small businesses. Over one million customers depend on CIT to provide the financing needed to run their businesses. In addition to being one of the largest independent leasing companies in the U.S., CIT maintains the following leadership positions among others:
* #1 factoring company in the U.S.;
* 3rd largest railcar lessor in the U.S.; and
* 3rd largest aircraft lessor in the world.
As previously announced, CIT expanded its $3 billion senior secured credit facility by an additional $4.5 billion on October 28, 2009. These funds, supplemented by cash generated from operations, will allow us to meet clients’ needs and to satisfy customary obligations associated with the daily operation of its businesses during the confirmation process. CIT has also secured an incremental $1 billion committed line of credit to provide supplemental liquidity as it pursues that plan.
In conjunction with today’s announcement, CIT has filed a number of first day motions that will allow it to continue to operate in the ordinary course during the confirmation process. These motions include requests to continue the payment of wages, salaries and other employee benefits. Additionally, the Company filed a motion seeking the necessary relief from the Court to pay its vendors and certain other creditors in full.
Under the proposed prepackaged plan of reorganization, all existing common and preferred stock will be cancelled upon emergence.
Treatment of Securities in Offers and Solicitations
The original CIT Group Inc. offers launched on October 1, 2009 have expired. Securities tendered in these offers will be released into their original CUSIP numbers as soon as practicable.
Securities tendered in connection with offers that have not yet expired, certain long-term notes maturing after 2018 and the Delaware Funding offers, are being retained in the CUSIP numbers for those offers; however, these securities can be withdrawn from the offers and returned to the original CUSIP number for trading. Any withdrawn securities can be re-tendered until the expiration date.
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Link to Bloomberg Story: http://www.bloomberg.com/apps/news?pid=20601087&sid=aW_ngoMWF.u0&pos=1
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Sucks to be a small business. If I recall 2000 distributors that support 10 times as many businesses use CIT. Wonder what happens now to the Holiday season...
Futures will be down big.
I am just wondering how the chain smoking, vodka guzzling media whores at CNBC are going to paint this as "good news".
'In other news, the recession is over because there was 1 single quarter of + GDP growth!'
TRUST me...the bought and paid for Corporate shills of CNBC will find a way to spin this...
I like your ideas and thoughts. While chat and sohbet with my friends talking about it.
The spin is obvious: This was already discounted by the market. Now that it's over, there will be no more uncertainty, blah, blah, blah.
I'm wondering who is left to spin.
Should be a fun week.
"MARK IT ZERO, DUDE"
Walter, ya know, it's Smokey, so his toe slipped over the line a little, big deal. It's just a game, man.
Sounds a none event the way its been packaged.....
whats your guess Robo man ? I would say DOW down 240 on monday....
It's no big Lehman, I think. More like Bear Stearns
If so, not on this... No surprise here, except that operations will continue (sorta)... I thought they would just wrap it up and chain the door.
Anyone know whether CIT was much of a player in derivatives? The gambit with the operating companies continuing in business might work in some scenarios. But I curious because if the OpCos had many trading agreements and used the parent as a Credit Support Provider, then they'll still be in default and wind up with a run on the bank. It'll be interesting to see....
I am going to go on a limb and say we dive deep red Monday and CNBS blames CIT BK as the cause and not the sympton it is...
No way. This is a green shoot. No one needs CIT anymore because the Fed has dumped so much liquidity out there; Futures up 240
"This 240 is brought to you by: GS, the professional mega hyper reverse psychology... HAL9000, power for your rises"
lol
I suppose its time to short stocks and go long dollars and bonds for the next few months.
How easy is that?
I'm betting the farm...
Hey Robo,,
Glad to see you back, how's the head cold? Vitamin D3
I love when the "prepackaged" word is used. Like that makes it less bad??!!
The way I see the term "prepackaged" is that the majority of creditors think the company sucks and it sucks this much, as measured by the financial terms of the "prepackaged" workout.
On a scale of 1 (shoot it in the head) to 10 (basically salvageable) prepackaged simply means a majority held up score cards like judges at an Olympic diving competition and the consensus is in this case...........7.6 out of 10.
Or it could mean prepackaged like my GI Joe action figure (no, it's not a doll for boys) with the Kung Fu grip was all those many years ago.
It makes it worst. Prepack business are more likely to collapse back into bankruptcy for a second time. Prepacks that fall into bankruptcy also cost more.
It comes in a kit, like a Health Choice Steam Bowl meal.
A hermetically sealed dog turd in bright fancy plastic could be considered prepackaged too.
I think the machines have been prepared for this incident,so expect futures to be up(just remeber the day GM filed for bankruptcy,then Futures went up as a challenge to shorters,but then again who knows).
Market will open down a bit....slowly drift lower until either Bernanke, Geithner, or Obama, make a statement that everything is okay and the Kool-Aid, has not been poisoned. Then the market will stage a small rally, but end the day down 180. Place your bets.....and play for today, but make sure you are short all the way as this market eats dirt within 8 months, tops.
Ha!
Sage wisdom for the 'naughties.
Someday we'll put all this behind us and have a nice local-brew stout down at the pub and enjoy the pretty ale wife going around the tables and wonder what the last 300 years of nonsense was about, anyway.
cougar
I haven't figured out how yet, but ... this is definitely a Green Shoot!!
+1
This was expected, no surprise and it will have no effect on anything.
I'm not so sure, the market is on shaky ground right now.
Oct downturn.
http://www.youtube.com/watch?v=gQETQAW0jZo
I imagine we taxpayers will get our 2.3 billion back, right?
The check is in the mail.
If you happen to be a taxpayer AND work for Goldman Sachs, the answer is yes.
Mark it zero!
Closure to a long story. I guess the US Govt's $2.3 B loss might have an effect on the market.
Will this result in full access to the menu of Fed / Govt. lending / bailout programs?
Step 1: Futures down
Step 2: Investors "flee" into dollars and bonds
Step 3: 10-yr. yield plunges to 3.1% again, while the dollar rallies with a vengeance
Step 4: Turbo Timmy floats off $300 billion, of course its 400% oversubscribed
Step 5: Government creates another alphabet soup program to mop up CIT's bad loans
Step 6: Mop up completed, financed with near zero cost financing
Step 7: Goldman floats new IPO for CIT, billions are raised, Goldman scraps in huge dealmaking fees
How easy is that?
Taxpayer wins! lol.
CNBC REPORTS " Huge M & A income for G old man."
I got that from my magic8ball.
I dunno about that. It is actually a contrarian play to be bearish on the dollar during a market selloff.
Remember on friday gold and some gold stocks did finish up on the day. Maybe it is time that the dollar tanks along with the market.
I wonder how many credit default swaps are outstanding against CIT?
And if G S holds them the payout ratio is 100%...gaa rroonnn ttteeeeed !!!
CRAPLOADS. Care to wager which regional banks are holding them? The .KBW should be EASY freaking money.
No financial advice here, I'm JUST FREAKING stating the obvious.
Wow that whole GS deal was serendipity for them.. Boy, I wish I had timing like that.
A prepackeaged here....can esily turn into a 7.
Hopefully Jeff Peek's wife will do a follow up article. Perhaps instead of confessions of a tarp wife, could be confessions of a wife whose husband ran an historically successful company into the ground. Don't you love folks like this?
Let me get this straight. No longer happy to front running the market,GS is now front running bankruptcy. Even with a "prepackaged" deal, their deal may not be legal and they will need to join the pack like everyone else.
edit: Our $2.9 is first on the list, no?
How do some of the posters in comments post images and charts?
only a ZH contributor can do that.
Too bad, have a great Cramer cartoon:)
Post the web site link to the cartoon. I have 95% confidence we can successfully click the mouse 2 out of 3 times after 20 years of experience.
Black Monday?
Black Monday?
It feels like 1987.
"Art Cashin: Some 'Eerie' Things About This Market" -- "There’s just some eerie things about this—it’s reminiscent of spring and summer of ‘87 when nobody believed the rally and it kept going up despite skepticism, people shorting into it"
http://www.cnbc.com/id/32796678
"Art Cashin: Why the Next 5 Trading Days Are 'Critical'" -- "Or we could turn and crack open like an egg."
http://www.cnbc.com/id/33179139
Why do I feel as though we have seen this picture before? We all expect the market to do what it is supposed to do tomorrow but the powers that be will want to suck us all in and rally this puppy green on the day in an effort to say "see, its not so bad". I think that in a true free market system the DOW blows 5% off the top tomorrow but we are not living in a true free market system anymore. That is the troubling part. That no matter how bad things really are, the market might not be allowed to reflect it.
Might not be allowed?
You can toss it up but you cannot make it fly. There is no air under the wings. There is no lift, only turbulence. It can bounce but it cannot fly.
I don't know when it's coming down... but it is. It might not even come down intact, but in pieces, and some of the pieces might remain "in the air" longer than the rest.
But that's not flight. That's asynchronous destruction.
cougar
Classic cougar
"CIT is a SCREAMING BUY at these prices!!! Start buying with both fists!!!! IT'S A NO BRAINER!!!!!!"
Sarcasm off.
I thought maybe you were Cramer.
Woo...almost gambled on CIT Friday, now i'm glad i stayed away!!!
Hey CIT I'm really happy for you. I'll let you finish, but Lehman was the best bankruptcy of ALL TIME.
Hey CIT I'm really happy for you. I'll let you finish, but Lehman was the best bankruptcy of ALL TIME!!
...I guess I posted it twice...oops
its pronounced 'Imma let you finish'
but nice one:)
Yip, private sector ALWAYS does it better - Uncle Sam paid $2.3 bil to stage manage this gig and oops damp squib.
Sounds to me like a Cramer Enema is about to occur.
I'm just sayin.
Hold it a minute, I need to get a few tubes of K-Y ready.
OK, I'm all greased up. You may proceed.
Have a look at the FX markets, there's your save for the futures EUR/JPY went up like a R-O-C-K-E-T in about a minute. Seems to be the pair to watch for market leadership at the moment.
Chapter 11? Meh. Whatever GS wants to happen will happen, that goes for CIT & that goes for the broader markets too. They even profit when they go down. They own us.
Check out the WSJ - Goldie looking to buy $1bn tax credits from FNM - TSY may block it if ots not in the public interest. Yeah right - good luck with that! Look forward to Goldie paying even LESS tax going forward.
The big question is, will the dollar go up on the next market down like everyone thinks it will. Talk about a contrarian play, short the dollar and go long gold on monday, Gold did close up on friday.
The dollar goes up because there's not much else you can by in distressed markets. There's just not enough gold, euro, yen, etc in those situations and what is there dries up quickly at high prices: you are left with dollars IF you are lucky in smaller markets. That's all.
CIT BK = European Nuetron Bomb
http://www.forbes.com/feeds/afx/2009/07/14/afx6650823.html
European CDOs would suffer widespread hit from CITSome may say "old news", but synthetic CDOs of CDS are a game of hot potato or Old Maid.
So who's holding the Queen of Spades?
LOL
I was talking to a guy, who happens to be well off about $20m, on friday. I said looks like CIT is going down. "Bullshit" he says "we're coming back"
Sweet, I get to be right and he gets to be less rich
A fool and his money will soon part.
haha...nice!
Am I the only one who hopes that lying cocksucker Cramer took his own advice and sunk his entire net wealth into this crock of shit?
lol
Cramer's wife runs the family money.
She probably gives him a pittance monthly allowance to gamble with.
I guarantee that she trades the family accounts along the same lines as Goldman.
If Cramer were not married, he'd be flat broke by now.
notwithstanding, futures are higher
http://finance.yahoo.com/q/fc?s=ESU10.CME
ppt in early with a few bucks so everybody can go to sleep tonight feeling warm and cozy.
I think you are right... green all the way tonight... despite the Nikkei being on track to exceed the percentage loss in the US markets on Friday...
Notice Singapore MnN? The Dax should be an interesting show today...
The uncertainty surrounding CIT has been greatly eliminated. Thus, higher futures.
2.3 Billion more taxpayer dollars gone to payoff pinstripe wearing cocksuckers. It use to be illegal to loot a company before it goes bankrupt...now we give them some extra cash for the road.
Simply Orwellian:
CIT's move will wipe out current holders of its common and preferred stock. That means the U.S. government will likely lose the $2.3 billion it sunk into CIT last year in return for preferred shares to prop up the ailing company. The government could have lost billions more, however, had it not declined to hand over more aid to the company earlier this year.
Treasury Department spokesman Andrew Williams said the government will be closely monitoring the bankruptcy proceedings, but acknowledged that "recovery to preferred and common equityholders will be minimal."
At 5:55 EST, the BOJ began intervention in the FX market. The awesome reversal in the eur/us nightcrawler, jpy/us nightcrawler, and even the gb nightcrawler/us nightcrawler is another unwelcome addition to the intervention by the CB's in the markets.
Cha Ching... Remember this.. If CIT fails, Goldman wins -- with a $1 billion payoff" http://www.dailyfinance.com/2009/10/05/if-cit-fails-goldman-wins-with-a-...
Exactly. Da Boyz don't lose.
Thanks for the link, A Mclaren. Has anyone got a link to those top 1000 names--the Dtcc list? Tried to get on the site a year ago--NG. Also, I'm not Bloomberg equipped (poor). Is it just floating around on there? It would be interesting to know what the total outstanding cds liabilities are and how big a multiple of the actual indebtedness of CIT. Lastly, to McLaren's point about bagholders--its going to be really interesting to see if this draws any blood anywhere--surprise! "The whole CDO is worth what?" Is anybody else noticing that steady drip, drip, drip? Cash flow still matters, right? Right?
Never underestimate a Bankster's ability to stuff crap bombs into a portfolio--especially with names like "Jackrabbit 6". Seriously, where were the thought police when we needed them? Back in the day, the offering circular/prospectus had to be read and approved by a chimp somewhere! SEC Junior attorney, 3 months out of CUNY,circa 2006: "God, I hate Mondays. (Inbox) Another damn claims letter from that jerk in Boston on Madoff--why won't he give up? Ah, what's this?! 'Jackrabbit 6' (groan). Four inches thick--Are you kidding?--synthetic, pathetic. Mmmm,the rating agency likes it--AAA!. That was easy!" Reviewed and Approved. Stamp, Stamp.
So who's policing this cash flow daisy chain? All the back offices? I smell something in the air--it smells like collateral calls. Educate me folks.
Euclid
Friday's action was likely based on CIT's filing...Monday will be about something else...don't count on a down day based on this.
More likely we rally for two or three days on dipsh!t buying and hobby bear squeezin's, then tank like a motherfarker.
Statistically this is the case, anyway
http://vixandmore.blogspot.com/2009/10/vix-spike-of-35-in-four-days-is-s...
http://www.tradingtheodds.com/2009/10/trading-the-odds-on-monday-%E2%80%...
"CIT is the leading provider of financing to the retail sector and to women-, minority- and veteran-owned small businesses."
The off color jokes practically right themselves...
umm so this means mngmnt bonus's can go thru unaffected?
CNBC should be required to put Cramer's home address a chevron below every stock prediction he makes, so that the masses of people he misleads can go have a private word with him.
(Me, I just do the opposite of what he suggests.)
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