For now, CIT has reopened the credit spigot and was back providing advances to clients, according to sources. But the commercial lender said in a regulatory filing Tuesday that a Chapter 11 bankruptcy filing remained a possibility if some bondholders declined to tender their holdings by Aug. 17 and agree to take less than face value for the $1 billion in debt coming due next month.
“It’s a difficult position for our clients to be in,” said Victor Wahba, a partner at accounting firm Weiser LLP. “Sitting tight with CIT makes sense right now, but clients should also assess credit requirements on a long-term basis. They should put together rolling 12-month projections, and maybe even three years out to the extent that they can, looking at peak seasons and what those needs may be. That assessment should be the road map for making decisions on their financing needs.”
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