CIT Files for Chap 11 Bankruptcy
by Luis Paredes
Nov 1, 2009
CIT Group filed for Chap 11 bankruptcy protection this past Sunday and represents one of the biggest filings in U.S. Corporate history.
And while GM and WorldCom might have gone quietly in the night for manufacturers and retailers in the Lingerie Industry, CIT is a very different story as the company is one of the Industry's leading financiers
"This is really unfortunate news," said Sam Harouni of Donna Di Capri. "It's showing us the economy is still very fragile."
The Company has assured its clients and the public that its operations will continue and that money will flow.
"The decision to proceed with our plan of reorganization will allow CIT to continue to provide funding to our small business and middle market customers, two sectors that remain vitally important to the U.S. economy,” said Jeffrey M. Peek, Chairman and CEO of CIT.
As CIT provides financing to approximately 2,000 vendors including a myriad of Lingerie Retailers to help pay for daily operations, worry has naturally gained traction in everyone's minds.
It's important to note that company has stated that, "we have the liquidity to serve our customers throughout this process. We will continue to provide funding to our small business and middle market customers, two sectors that remain vitally important to the U.S. economy, as we have for over 100 years."
"If CIT is one of biggest lenders and is filing for protection, it's going to make it harder to get loans from other companies," noted Harouni. "It puts a lot of pressure on us as vendors because we have to play with our cash and our line of credit - it lowers down or margins."
Retailers are in the same boat with the vendors, but as we have seen, this Industry has weathered this economic storm and while CIT's filing is unfortunate, it hasn't been the only challenge manufacturers and vendors have faced. In fact, many have turned to CIT's competitors like GMAC, CitiGroup or alternative forms of lending such as micro loans or, as in Donna Di Capri's case, worked efficiently without major loans during this economic crisis.
In fact, GMAC and Citigroup could stand to benefit from CIT's filing and draw current or potential clients from them. Factors like Rosenthal & Rosenthal, Westgate and Sterling Factors are also available to this Industry.
"I think it could have been worse for us if we had carried a lot of debt," explained Harouni. "It's tough and dangerous right now, but the holiday season is coming up and we're going to do really well."
That kind of optimism is rooted in the careful financial and strategic planning Harouni's company and many others in the Lingerie Industry have laid down before Recession 2.0 that will see them through.
More information on CIT at cit.com.
See CIT's letter to Suppliers [here].
See CIT's letter to Customers [here].
