CIT Group Bankruptcy Nears as Goldman Sachs Reduces Loan to $2.125 Billion
Posted on | October 30, 2009 | No Comments
The talk of a CIT bankruptcy will not go away as many analysts now feel that the lender is likely to file bankruptcy in the next few days. Friday CIT Group reported that Goldman Sachs is going to reduce the rescue loan to $2.125 billion; this is a reduction of $875 million. CIT Group explained that it is only removing the part of the loan that it has yet to take.
CIT Group has paid Goldman Sachs $285 million as a fee for the loan reduction. In the agreement Goldman Sachs has stated that they will not terminate the loan if CIT Group files bankruptcy. If CIT Group does file bankruptcy the commercial lender will owe a $1 billion payment to Goldman Sachs. Either way, Goldman Sachs stands to benefit greatly from the CIT Group struggles.
The commercial lender has offered two option to its investors. There can be an exchange of bonds for new securities and equity or the approval of a reorganization plan prior to filing bankruptcy. The first option would help the company avoid bankruptcy altogether, at least for the time being. The lender is currently counting over 150,000 ballots from investors on which plan is preferred.
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Author: Jesse Wojdylo
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