So wait, CIT pledges some $10 billion in unencumbered collateral to get a $3 billion loan, and now the company’s new bondholders may pushi for it to go straight into bankruptcy? So unsurprising.
Bloomberg: Advisers to bondholders that rescued CIT Group Inc. with a $3 billion loan said creditors should push the company into Chapter 11 bankruptcy after a debt swap next month, according to a person familiar with the matter.
The lenders should require New York-based CIT to restructure its debt through a so-called pre-packaged bankruptcy, even if the company succeeds in swapping 90 per cent of the $1 billion of floating-rate notes that come due Aug. 17, Jeffrey Werbalowsky, chief executive officer of bondholder adviser Houlihan Lokey Howard & Zukin, said on a call with creditors yesterday, according to the person.
Some private-sector “rescue”, eh? Maybe the good news is that bankruptcy isn’t quite the dirty word it used to be.
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