On Tuesday, CIT Group Inc. won approval fo a restructuring plan that will shed approximately $11 billion in unsecured debt from its books, and will allow it to exit bankruptcy. The commercial lending giant initially filed for Chapter 11 on November 1st hoping to exit bankruptcy court quickly and without lengthy fights from creditors. CIT listed assets of $71 billion with nearly $65 billion in liabilities, making it one of the largest bankruptcies on record. Yet the company had secured strong creditor support for its prepackaged Chapter 11 reorganization plan prior, allowing a quick and expedited bankruptcy process that lasted a mere 5 ½ weeks.
As a consequence of the Chapter 11 reorganization, shareholders will likely be wiped out. Furthermore, the U.S. is unlikely to recover much, if any of the $2.3 billion in taxpayer money used to keep CIT afloat. However, senior unsecured debt holders will receive about 70 cents on the dollar plus equity in the new company. Preferred stock holders may also recover some of their losses depending on the value of CIT’s new stock. Equity in the new company is expected to be worth $5 to $11 billion.
Thursday, December 10, 2009
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1 comments:
I have to say you sure have the nerve to invest in banking stocks. I have never regarded banks' insurance companies' financial services companies stock brokers as real busineses. All they do is recycle money. I also have never invested in any financial services companies and never will. Just look at their horrible record almost 2 out of every 3 savings and loans went out of business in the 1980's and just think about what happened a couple of years ago. Do I need to say anymore. Oh one other thing most If not all of the publicly traded subprime lenders are out of business today.
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