CIT Group Bankruptcy Nets Goldman Sachs $300 Million in New Deal
Posted on | October 23, 2009 | No Comments
The possibility of a CIT Group bankruptcy remains but there is a chance that the lender could complete a deal to pay Goldman Sachs $300 million rather than $3 billion over a disputed payment. The Wall Street Journal reported that CIT Group has reached a tentative deal with Goldman Sachs. The deal would end a dispute with Goldman Sachs that involves a $1 billion payment if CIT Group files Chapter 11 bankruptcy.
With the new deal in place CIT Group would only pay $300 million rather than $1 billion if they do file bankruptcy. Either way, Goldman Sachs stands to benefit from a CIT bankruptcy. The new agreement with Goldman gives CIT the opportunity to receive billions from bondholders which could help the struggling lender to reorganize through a debt swap or in a bankruptcy court.
Bank of America Merrill Lynch would arranged the new loan but is still contingent on Goldman Sachs. Earlier this week Subprime Blogger wrote an article on Carl Icahn offering a $6 billion loan to assist CIT Group. Many analysts feel that the offer from Carl Icahn is debt replacing debt and will not benefit CIT Group. The company is doing everything possible to avoid bankruptcy but there remains a strong possibility of Chapter 11 for CIT Group.
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Author: Mike Garner
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