Business News
CIT still at risk of bankruptcy despite last-minute loans
Jul 21, 2009, 15:59 GMT
New York - CIT Group, a critical lender to small businesses in the United States, remained at risk of bankruptcy Tuesday despite reaching a last-minute deal with creditors for about 3 billion dollars in emergency financing.
CIT said that, even with the financing deal reached late Monday, it would need to more broadly restructure its debt by mid-August in order to avoid filing for bankruptcy.
The news sent its stock plummeting again on Tuesday after a brief reprieve on Monday. CIT provides loans to about 1 million small and medium-sized businesses in the United States, but the effect its collapse would have on the country's sputtering economy is disputed.
CIT's creditors agreed Monday evening to provide up to 3 billion dollars in emergency loans to keep the company afloat. CIT would be the largest bank bankruptcy since the collapse of Washington Mutual in September.
President Barack Obama's administration has refused to intervene this time around. The Treasury Department has already provided CIT with 2.3 billion dollars in emergency loans.
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