CIT collapsed today into bankruptcy. Few people know the name or the service provided. Today’s service, bankruptcy, was delivered to stockholders. Stockholders just lost all their money.

Among those stockholders? You.

Complete story here.

That [bankruptcy] means the U.S. government will likely lost the $2.3 billion it sunk into CIT last year. The government (us) got screwed by the management and bond holders.

The management gets to keep their jobs and perks. And bond holders get to keep their financial interests in the company.

Analysts warned that the bankruptcy could add to the uncertainty around loans for the nation’s small businesses, especially retailers, which make up a significant portion of CIT’s clients and are already struggling with tight credit markets.

CIT is the financier for about 2,000 vendors that supply merchandise to more than 300,000 stores, many of which are gearing up for the critical holiday shopping season. They rely on the lender to cover costs ranging from paying for orders to making payroll. Any disruption caused by bankruptcy could wreak havoc on their operations, Joe Alouf, a partner with Eaglepoint Advisors, a crisis management company that is partly owned by Kurt Salmon Associates.

 

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