CIT Group Bankruptcy Agreement; Common & Preferred Stock Cancelled

Yesterday CIT Group filed for bankruptcy protection with nearly 90% of their debt holders voting in favor of the agreement. The key provisions of the agreement are:

• Emergence Sought by Year-End
• Operating Entities Remain Unaffected and Highly Liquid
• Continue Lending to Small and Middle Market Businesses
• "Under the proposed prepackaged plan of reorganization, all existing common and preferred stock will be cancelled upon emergence"

Bondholders will get about $0.70 on the dollar plus new common stock while current shareholder will probably get wiped out.

Click image for full size graph courtesy of stockcharts.com

Bloomberg reported "the U.S. Treasury Department said it won’t recoup much, if any, of the $2.33 billion of taxpayer money that went into CIT, the largest firm to go bankrupt after getting a federal bailout." (Bloomberg Story)

CIT had been trading with hopes shareholders would not be wiped out. I want to make sure all my readers view the CIT Bankruptcy Press Release so you understand that the currently trading shares are worthless:

"Under the proposed prepackaged plan of reorganization, all existing common and preferred stock will be cancelled upon emergence"

Click image for full size graph courtesy of stockcharts.com

This bankruptcy is not a surprise but taxpayers will probably lose the $2.33B we invested in the company.

CIT hopes to emerge from bankruptcy in 60 days.

• CIT Bankruptcy Press Release
  
  
• CIT Investor Relations:
  Ken Brause, 1-866-54CITIR (542-4847)
  Executive Vice President
  investor.relations@cit.com