CIT Org Chart And Other Data From FTI Affidavit
CIT Org Chart (from Affidavit):
In other news, Robert Gerber (GM, Lyondell, Adelphia) has been assigned to this case.
More background info from the FTI affidavit -
On December 22, 2008, CIT became a bank holding company regulated by the Board of Governors of the Federal Reserve System under the United States Bank Holding Company Act of 1956. With approximately $71 billion in assets as of June 30, 2009, CIT is one of the 25 largest United States bank holding companies and is the sixth largest lender of commercial and industrial loans. The commercial and industrial lending represents a higher portion of the Company's assets than for any other United States banking institution.
Among other subsidiaries, CIT controls CIT Bank, which is chartered by the Department of Financial Institutions of the State of Utah as a state bank. As of June 30, 2009, CIT Bank, which had primarily funded consumer loans in conjunction with select vendor programs until 2008 (when it shifted its focus to commercial lending) had total assets of approximately $9.9 billion. CIT Bank's primary regulators are the Federal Deposit Insurance Corporation ("FDIC") and the Utah Department of Financial Institution. CIT Bank is not a Debtor in these chapter 11 cases.
The Company operates its business primarily through four business segments: (a) Corporate Finance, (b) Transportation Finance, (c) Trade Finance, and (d) Vendor Finance. The Corporate Finance segment originates transactions at CIT Bank. In addition, CIT has a portfolio of consumer loans originated by CIT Bank. None of the Company's operations are conducted through the Debtors.
Reasons for Bankruptcy:
Much of the Company's initial difficulty can be attributed to its sub-prime home lending business. The Company ceased origination in this business in 2007 and disposed of the portfolio in its entirety in 2008. In addition, the Company's business historically relied upon access to both the secured and unsecured debt capital markets for cost-efficient funding. The disruptions in the credit markets coupled with the global economic deterioration that began in 2007, and downgrades in the Company's credit ratings to well below investment grade in 2008 and 2009, materially worsened the Company's liquidity situation and left it without access to the unsecured debt market and impaired its access to cost efficient secured financing. Since January 2008, the Company has obtained interim financing through secured financings and has reduced financing needs through balance sheet contraction.
As part of its overall plan to transition to a bank-centric business model, the Company (i) applied to participate in the FDIC's Temporary Liquidity Guarantee Program ("TLGP"), which would have enabled the Company to issue government guaranteed debt; and (ii) applied for exemptions under Section 23A of the Federal Reserve Act ("Section 23A") to transfer a significant portion of its U.S. assets to CIT Bank, which would have enabled the Company to generate liquidity by leveraging the deposit-taking capabilities of CIT Bank. In April 2009, the Federal Reserve granted the Company a partial Section 23A wavier to transfer $5.7 billion of government-guaranteed student loans to CIT Bank. In connection with this transaction, CIT Bank assumed $3.5 billion in debt and paid $1.6 billion in cash to CIT Group Inc.
On July 15, 2009, the Company was advised that there was no appreciable likelihood of additional government support being provided in the near term, through either participation in the FDIC's TLGP or further approvals of asset transfers under its pending Section 23A exemption request. Following the announcement of these developments, the Company experienced higher draws on financing commitments which accelerated the degradation of its liquidity position. This liquidity situation, continued portfolio deterioration and the weak economic and credit environment, all weighed heavily on the Company's recent financial performance.
On the bankruptcy prospects:
While the conditions of the exchange offers were not satisfied and the results of Long-Dated Senior Unsecured Notes Solicitation and the Canadian Unsecured Notes Solicitation are still outstanding, the Initial Solicitation results indicate that all impaired classes entitled to vote on the Plan have accepted the Plan by more than two-thirds in amount and one half
If consummated, the effect of the Plan will be to significantly deleverage the Company' balance sheets by significantly reducing CIT Group Inc.'s obligations under its bond and bank debt through the conversion of such debt into longer-term maturing debt and equity. The resulting debt structure of the Company will provide much-needed additional liquidity. The Company believes that, through the Plan, holders of claims will obtain a substantially greater recovery from the estates than the recovery they would receive if the Company liquidated. The Company further believes that the Plan, if consummated, will substantially enhance the Company's capital structure and liquidity position, afford the Company the opportunity and ability to continue their businesses as viable going concerns and to execute its broad business restructuring strategy, and preserve ongoing employment for the Company's employees.