Last month it asked bondholders to swap debts for new debt and stock in a restructured company.
The bankruptcy is one of the largest in U.S. history and likely ensures that the U.S. government's $2.3 billion rescue loan from the Troubled Asset Relief Program (TARP) last year will not be paid back, according to the Washington Post. The Treasury Department declined requests from CIT last summer for a second bailout.
CIT said that the bankruptcy only applies to the bank holding company and not operating subsidiaries, meaning business will function as usual during the process.
CIT's situation is important because it provides credit to many suppliers in the retail industry, as well as aerospace, equipment and rail leasing companies. If small companies are unable to obtain financing, they themselves could go out of business and curtail orders, thereby impacting transportation and other service providers.
The banking firm is the third-largest rail lessor in the United States and the world's third-largest aircraft lessor.
The company said it has the liquidity to serve its customers throughout the process
The financial crisis hit the non-traditional lender hard because the investors it relied on for cash to lend to customers pulled back into a more defensive posture to protect shrinking portfolios from more risk.
