CIT Group CEO Jeffrey Peek will be resigning from the company by the end of the year as the company teeters on the brink of bankruptcy. The lender provides the financing for a large number of retailers in the U.S.
Peek is next in a long line of financial executives who are getting pink slips as their companies circle the drain.
Peek joined CIT in 2003 after being denied the top job at Merrill Lynch & Co. The New York-based commercial lender lost $5 billion in the last nine quarters as the collapse of the market for subprime mortgages sparked the worst financial crisis since the Great Depression and cut off CIT's short-term funding.
CIT has asked bondholders to exchange unsecured obligations for new secured debt maturing in four to eight years and preferred shares. Bond and credit-default-swap prices show that investors are speculating the offer to exchange about $29 billion of debt won't prevent the company from filing for bankruptcy.
CIT, which finances about 1 million businesses from Dunkin' Brands Inc. to Eddie Bauer Holdings Inc., will seek court protection through a pre-packaged bankruptcy should the debt exchange fail, according to an Oct. 1 filing. The company posted a second-quarter loss of $1.62 billion as more customers defaulted on loans.
Unless CIT has interim financing and a buyer lined up, bankruptcy isn't going to help the company pull out of its downward spiral. Retailers depend on CIT Group to keep going and the company's continued financial problems have retailers very worried.
