Can CIT hang on?

Look up the PowerRating of CIT and see how it has performed over the past week as well as the current proprietary PowerRating.

Nov 03, 2009 (Inland Valley Daily Bulletin - McClatchy-Tribune Information Services via COMTEX) -- CIT | Quote | Chart | News | PowerRating -- Jittery Inland Empire business owners who have credit lines with CIT Group Inc. are reassessing their financial options after the mega commercial lender filed for bankruptcy this week.

"(CIT borrowers) should at least be aware where their credit is from," said Vincent McCoy, director of Inland Empire Small Business Development Center. "CIT has done deals that others might not have done. CIT was fairly aggressive."

Now it's up to a bankruptcy judge how CIT should reorganize its troubled assets under Chapter 11 proceedings, which means local borrowers' credit lines could change.

"Nobody is really going to know (what happens)... unless you're on the inside," said Joe Borrie, principal of J.L. Borrie & Associates, a Riverside-based bankruptcy law firm representing business owners.

"They could be going in, seeking orders right now to allow them to continue to loan money," Borrie said. "It's a possibility. Or they may be out of the bankruptcy in six weeks."

The New York-based lender, one of the largest lenders to the retail industry, serves 2,000 vendors nationwide that supply merchandise to 300,000 stores, according to Craig Shearman, spokesman at the National Retail Federation.

Analysts say 60 percent of the apparel industry depends on CIT for financing.

The commercial lender's trip through bankruptcy reorganization may well be speedy given that it's already reached agreements with creditors on restructuring its debt.

But the real test will come from CIT customers, who could decide to take their business elsewhere.

CIT wouldn't be able to survive Chapter 11 reorganization if too many of its customers close their accounts. Some have already been pulling their business in recent months as CIT struggled for survival, but it's still too early to know how many will remain.

One factor playing in CIT's favor is that tight lending conditions would make it tough for customers who wanted to leave. CIT also provides specialized types financing services that relatively few competitors offer. Even with those advantages, analysts say it's still anyone's guess whether CIT can pull it off.

The bankruptcy filing shows $71 billion in finance and leasing assets against total debt of $64.9 billion. The move wipes out current holders of its common and preferred stock, meaning the U.S. government will likely lose the $2.3 billion in taxpayer funds it sunk into CIT last year to prop up the company.

Associated Press contributed to this report.

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