Business News
REPORT: CIT has rescue deal with Carl Icahn
Oct 31, 2009, 3:56 GMT
New York - CIT Group, a critical lender to small businesses in the United States, sealed a last minute rescue deal with billionaire investor Carl Icahn, the Wall Street Journal reported Friday.
But the bank remained at risk of bankruptcy and was likely to make its application in court as early as Sunday or Monday, the newspaper reported.
Last week, CIT reached a last-minute deal with creditors for about 3 billion dollars in emergency financing.
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, with 71 billion dollars in assets, would be the largest bank bankruptcy since the collapse of Washington Mutual in September 2008. 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.
That taxpayer money is likely to be wiped out in the bankruptcy proceeding, the Journal reported.
CIT expects to have enough creditor support to complete a prepackaged reorganization by year-end, the Journal reported. Icahn had been pushing for liquidation.
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