It's like the end of a horror movie: just when you think all the bad stuff is over, something terrible happens. The nation's largest factor, CIT Group, is facing bankruptcy once again. That could have devastating effects on all the retailers that rely on CIT to finance their inventories for upcoming shopping seasons.
The company has proposed a debt exchange, but if bondholders don't accept it the company is going to file Chapter 11 with a prepackaged plan of reorganization.
The 101-year-old lender accounts for about 60 percent of fashion's factoring volume and lent the apparel industry about $4 billion last year, according to estimates.
"We believe this plan maximizes franchise value and can be executed quickly and effectively through a series of voluntary debt exchange offers or an expedited in-court restructuring process," said Jeffrey Peek, chairman and chief executive officer. "Upon completion of either alternative, CIT will be a well-funded bank holding company with a strong capital position and market leading franchises."
