NEW YORK -- Finance company CIT Group Inc said on Friday that creditor approval of its restructuring plan would help prevent significant loss in its value that could come with a so-called "free-fall" bankruptcy.
The company said that the liquidation value of the company in a free-fall scenario is between 6 cents to 37 cents on the dollar.
CIT mapped out the plan in slides accompanying a webcast management presentation that were filed with the Securities and Exchange Commission and available on its website.
Carl Icahn, who has said he is the largest holder of CIT's debt, immediately issued a letter to bondholders saying that the company has exaggerated the negative effects of filing for bankruptcy without their approval.
CIT, which has been squeezed by the downturn in the economy and the credit crisis, is currently running a debt exchange offer that it has said may enable it to avoid bankruptcy. It has also put forth a plan for reorganization through bankruptcy that it will put into place if the exchange offer is not successful.
"Let's be clear. A free-fall bankruptcy will require significant new liquidity to preserve asset values, and would create the need to raise even more costly secured financing, resulting in a lower recovery for today's unsecured bondholder," CIT Chairman and Chief Executive Jeffrey Peek said in the pre-recorded presentation.
In the slides, the company said that a filing that has not been approved by bondholders would increase the risk of a seizure of CIT Bank, increase the costs of bankruptcy and limit the company's ability to insulate valuable operating businesses.
CIT makes loans mostly to small and medium sized businesses and also has a large factoring business that services the retail sector.
© 2009 Reuters. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters.
|
