CIT Group, which emerged from its 38-day bankruptcy last week, announced it will commit $500 million to its small business lending program for government guaranteed loans.
Judge Allan Gropper of the U.S. Bankruptcy Court in Manhattan approved the company’s prepackaged plan last week. The loans will be targeted to middle-market companies — a segment of the economy that has seen a dramatic drop in lending amid the credit turmoil.
CIT, a century-old lender to midmarket companies, emerged from bankruptcy, having shed $10.5 billion worth of debt.
Under the reorganization plan, CIT’s old common and preferred stock was cancelled and distributions of new debt and equity securities are to be distributed. CIT’s new common stock was listed on the New York Stock Exchange and began trading last week. The company’s non-reinstated debt will also be cancelled.
Shares of the newly-emerged CIT were changing hands at $29.13 each on Monday, slightly lower from Friday’s closing levels. Prior to its bankruptcy, CIT shares were trading below $1 each.
Meanwhilc, CIT will select a new board of directors, and — as previously announced — CEO Jeffrey Peek will step down at year’s end.
