CIT: Bankruptcy still possible

-- Home Textiles Today, 7/22/2009 8:30:00 AM

New York— CIT Group warned in a federal filing that it may still need to file for bankruptcy protection if its cash tender offer for debt maturing in August fails.

The lender, which announced Monday that it had secured $3 billion in emergency financing from a group of its largest bondholders, has $1 billion in debt due next month. Under a recapitalization plan, it is offering debt holders $825 for every $1,000 in notes if they are tendered by July 31.

In a Securities and Exchange Commission report filed today, CIT said that if the offer expires without enough tenders (at least 90% of the principal) and if that minimum tender condition is not waived, the company may seek bankruptcy relief "unless we are able to obtain alternative financing."

That relief could include seeking court approval to sell its assets or pursuing a plan of reorganization, among other steps, the company said.