CIT is bankrupt. Now what?

As I have mentioned in some posts (in my other blog) I have been following the fate of CIT
with particular interest. You can find a post here and here. CIT is the USA biggest factoring company - with 8B in factored receivables. One concern I have always had is - what will happen to their clients - and - what will the impact on the economy be? Her is an article on the WSJ that talks about the concerns of CIT's bankruptcy.

I suspect - this will be a double edged sword. Initially, it could be a boom for the factoring and purchase order financing industry as they pick up some clients form CIT. The effects on the economy could be very negative. One important aspect of this bankruptcy - clients could see their lines of financing modified or eliminated, which would affect their ability to meet current expenses and possibly lead to layoffs and business closures. Not a good scenario - and I hope it does not happen.

The same goes for companies that were hoping to get other types of business financing form them - such as a business loan.

Hopefully the bankruptcy will work out for everyone - otherwise we stand to lose quite a bit.


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