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CIT, which provides financing for small businesses including many stores, filed for Chapter 11 Sunday in one of the biggest bankruptcies in corporate history. CIT lent about $4 billion to clothing companies last year, and it handles factoring (buying a company's debt, basically) for over half the fashion industry. The bankruptcy is clearly a blow to retailers, which have been panicking about CIT's stability since the company began wobbling this summer, but Times reports that it could be worse:
By filing a so-called prepackaged bankruptcy plan, CIT is aiming to limit the damage inflicted on the scores of retailers and other companies that depend on the specialized financing it provides.And WWD adds that the factoring wing of the business will continue as usual. Still, nobody wins here, not even you, dear reader—your taxes helped bail out CIT last year.
· Creditors Back CIT’s Bankruptcy [NYT]
· CIT Files for Bankruptcy [WWD, subscription req'd]
· CIT Finally Files for Bankruptcy [Daily Intel]