July 9th, 2010 by Reed Allmand 
CIT Group, the 102 year old financial institution which emerged from Chapter 11 bankruptcy in December, beat analysts’ expectations by making a profit in the first quarter of 2010. And despite exiting Chapter 11 bankruptcy with a costly $7.5 billion credit facility, the commercial lending company prepaid 1.25 billion of debt after securitizing receivables and selling assets.
The pre-payment made Wednesday and disclosed Thursday in a filing with the Securities and Exchange Commission consisted of a $950 million mandatory portion—required under its credit agreement after the securitization of receivables and the sale of assets—and $300 million paid voluntarily by the lender to small businesses.
The company had made it clear in April, that it wanted to make $1.5 billion in pre-payments after noticing that its liquidity and cash flow had improved. CIT Group is another Chapter 11 bankruptcy company that has proven that bankruptcy can be beneficial to troubled companies, even when they seem to be on their death bed. CIT Group filed bankruptcy at the height of the credit crunch and many analysts predicted that it would not only fail to make a profit; but that it probably would not be able to survive the bankruptcy process. Citing the fact that CIT Group’s business model, which relied on bonds and commercial paper to raise funds, was impossible to sustain due to the credit crunch and was making it nearly impossible for the lender to raise capital during bankruptcy. However, CIT Group was able to raise the capital necessary to complete its Chapter 11 bankruptcy and successfully exit bankruptcy a more profitable company.
About Reed Allmand
Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."
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