Another Big Commercial Lender Files For Bankruptcy
On the heels of Capmark Financial Group filing for bankruptcy last week, this week saw another super huge commercial real estate lender file for bankruptcy.
This time it’s CIT Group, a lender to way more than 100,000 small and medium sized businesses. This is one of the largest companies in history filing for bankruptcy, yet at the same time, it looks like they also already have a plan in place to start paying creditors and get out of bankruptcy by the end of the year.
Of course, it doesn’t help the rest of us to know that the federal government gave them $2.33 billion to help bail them out of trouble, and that it didn’t work. Seems that the record for bailing out banks and lenders didn’t work out all that well. At its peak in 2007, CIT’s shares were trading at around $60 each; now they’re trading at 72 cents, barely above the cutoff.
The thing about these people is that, by filing bankruptcy, oddly enough it’s going to force some of their creditors to pay them money, while shedding around $10 billion in debt. The company is still giving out loans, and plans on giving out loans, while it’s in bankruptcy, as some of their subsidiaries are doing well enough to operate on their own. I have to admit that this seems reckless and conceited, and it may explain why the current CEO is on his way out, having resigned to be effective at the end of the year.
That’s two big commercial real estate lenders in two weeks. I’m afraid of what’s still to come. Now, are you still believing these people who are saying the economy is improving?