CIT's Woes Could Complicate Holiday Buying Season
There is hardly any firm in the CE industry that has not been affected by the troubles that CIT Group is going through. The company lends to almost one million small businesses, 300,000 of which are retailers and about 1,900 are manufacturers.
One of the most troubling aspects of the whole debacle is that credit lines that seemed to originate from business other than CIT, such as a local bank, were actually guaranteed by CIT. The lender's problems ultimately cause ripples in the economic pond in the form of delinquencies, cancellations, nonpayment and reduced or cancelled orders in a variety of product categories.
Here's some background on CIT's troubles. At the beginning of September, the 101-year-old company announced that it deferred an interest payment on some notes. CIT is now trying to avoid bankruptcy and buy a little time in order to restructure. It has until October 1 for its creditors to approve a restructuring plan or bankruptcy becomes a possibility.