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Goldman Sachs stands to receive a payment of US$1B, while US taxpayers would lose US$2.3B, if the embattled commercial lender CIT files for Chapter 11 bankruptcy protection, LTN learned today. The payment is based on the structure of a US$3B rescue finance package that Goldman extended to CIT on June 6 2008, about five months before the Treasury bought US$2.3B in CIT preferred shares to prop it up at the height of the US financial crisis. The potential loss for taxpayers would be the biggest so far from the government’s capital injection plan for banks. The agreement with Goldman states that if CIT defaults or goes bankrupt, it “would be required to pay a “make whole” amount that totals US$1B, people familiar with the transaction said. While Goldman is entitled to demand the full amount, it is likely to agree to postpone payment on a part the amount. Read more

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CIT Group Inc. (NYSE: CIT)

CIT Group Inc. (CIT) operates as the holding company for CIT bank, which provides commercial financing and leasing products, and management advisory services to the small and middle market companies worldwide. Its products principally include asset based loans; secured lines of credit; operating, capital and leveraged leases; vendor finance programs; import and export financing; debtor-in-possession/turnaround financing; acquisition and expansion financing; letters of credit/trade acceptances structuring; and small business loans.
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