Businesses not subject to means test

After announcing an influx of loans and financial support from various sources, including a $1 billion loan from Carl Icahn, CIT Group has officially filed for bankruptcy protection.  They are seeking protection under Chapter 11 bankruptcy which is designed for reorganization, not complete discharge of all debts.  In order to avoid bankruptcy, CIT …

Tags: Bailout Chapter 11 Title 11 United States Code CIT Group NYSE:CIT

When the government offered direct bailouts to banks during the first half of this recession, many taxpayers and homeowner advocates doubted that the aid money would “trickle down” to ordinary Americans or even be repaid. CIT Group, which filed for Chapter 11 bankruptcy just a few months ago has become the first bank to materialize critics’ fears. The 101 year old commercial bank …

According to an article in the Star-Telegram, CIT Group’s Chapter 11 bankruptcy is a source of angst for the nation’s small and mid-sized retailers, many of whom rely on the lender for credit. CIT Group insists that its bankruptcy will not cause disruptions for the already instable retail industry which has watched revenues drop since the financial crisis began.

The article said:

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After filing Chapter 11 bankruptcy on Sunday, CIT Group is hoping that it will fair better than previous financial companies who have filed bankruptcy .  According to an article in the Star-Telegram , most financial companies who file for bankruptcy are usually liquidated or sold.

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“But the real test will come from CIT customers, who could decide to take their …

According to an article in the Star-Telegram, CIT Group, Inc. is battling to avoid filing Chapter 11 bankruptcy –again, as it struggles to survive the credit crunch and economic crisis.  The commercial lender is attempting to finalize a deal that would cut its debt by as much as 40 percent while giving its bondholders a large equity state in the company to avoid bankruptcy .

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According to an article in the Star-Telegram, CIT Group Inc., is asking bondholders to approve a prepackaged reorganization plan in case it is forced to file for Chapter 11 bankruptcy protection.

The article said.

“The troubled New York-based lender had launched the restructuring effort Oct. 1 with the hope that it will trim at least $5.7 billion from its near-term debt.”

CIT …

According to an article in the Bloomberg, commercial lender CIT Group Inc., is pulling no punches to avoid bankruptcy ; but may need to file anyway. The struggling commercial lender said that it is trying to avoid bankruptcy with a debt tender offer to bondholders which would include a $3 billion loan and $1 billion in floating-rate notes.

The article said:

"Even if the bond tender …

Chapter 11 bankruptcy has been talked about often throughout 2009. Companies such as GM, Chrysler and CIT Group which all seemed on the brink of complete failure filed Chapter 11 bankruptcy and came back from the abyss.  But how does Chapter 11 bankruptcy work its magic? How does it transform corporate losers into winners?

Chapter 11 bankruptcy allows the company filing …

In 2009 we saw many corporate bankruptcies move swiftly, with the company filing bankruptcy and emerging form the bankruptcy process in only a few months.  But what exactly are the bankruptcy tools being used by companies such as CIT Group, Gm and others? Let’s take a look at two frequently used strategies in Chapter 11 bankruptcy :

Pre-Packaged Bankruptcy

A Pre-packaged …

Senator Christopher Dodd and other members of the Senate Banking Committee are proposing legislation that would create a special bankruptcy process for failed financial institutions.

Members are discussing a two-stage process that would create a preferential option for bankruptcy followed by a regulator-managed resolution if bankruptcy fails, the person said. The source requested anonymity …

Britain and France announced that they will levy a one-time tax on large bonuses paid by bailed-out banks, while US banks who benefited from taxpayer bailouts are set to dole out bonuses that are even larger than bonuses during 2008.  I guess it’s been a good year—for the banks.

Wall Street banks are on track to pay $26 billion in bonuses for 2009 performance…That’s up from $18.4 …

According to an article in Reuters, the U.S. House of Representatives approved legislation last week that would cut major banks and student loan giant Sallie Mae out of a large slice of the $92 billion university student loan business if passed by the Senate.  Under the bill H.R. 3221 –the Student Aid and Fiscal Responsibility Act of 2009, all new student loans would originate with the …