1st
The latest chapter in the CIT saga is Chapter 11.
The article has some good stuff in it. I consider this passage to be the most important:
CIT accounts for about 70 percent of all short-term U.S. financing known as factoring, worth about $40 billion a year, according to Ray Ecke, president of Credit Management Resource in Oakland, New Jersey.
In factoring, suppliers and manufacturers sell payments owed for goods and services to companies such as CIT because they need immediate cash. The process gives vendors money to produce goods retailers have ordered. Retailers typically make payments within 90 days. After they do, a factor keeps a fee based on a percentage of the total order.
This is what I referred to in my previous post. What isn’t clear from this article (or any article on CIT), is how large this business unit will be going forward. CIT was in the process of shrinking it during this whole slide into bankruptcy. Now that they’re in bankruptcy and will exit with much better cash flow, I want to see someone mention this on a forward-looking basis. I suspect that the wind down will continue. This may be orderly, but it still pushes many retailers closer to death.
