CIT Group Goes Bankrupt, Bail Out Funds More Likely To Be Lost (CIT, BAC, BK, C)

CIT Group (NYSE: CIT) announced today that it will be filing for bankruptcy as its attempt to negotiate a debt change failed. On CIT Group’s chapter 11 petition, they listed assets totaling over $71 billion in assets while holding $64.9 billion in liabilities.

Because of the bankruptcy, the government stands to lose a large portion, if not all, of the $2.3 billion in bailout money they sent to the lender. However, not all would be lost as its subsidiaries will largely be unaffected by the filing. Its operating subsidiaries like CIT bank will remain operational and will still continue providing small businesses.

This bankruptcy is the largest in terms of assets since Washington Mutual’s (OTC: WAMUQ) seizure in 2008. Other banks with unmanageable debt includes Indymac Bancorp Inc. (OTC: IDMCQ).The largest unsecured claimholders they have in record are Bank of America (NYSE: BAC) with a $7.5 billion claim as a collateral agent, Bank of New York Mellon Corp (NYSE: BK) for $3.2 million as trustee for retail bonds and Citigroup (NYSE: C) for 2.1 billion as an administrative agent for a loan due 2010.