Associated Press Looks to Reichwald on Potential Impact of a CIT Collapse
“CIT Collapse Could Ripple Through Retail Industry”
July 17, 2009 – Manatt partner Hal Reichwald was interviewed for an article by the Associated Press entitled “CIT Collapse Could Ripple Through Retail Industry,“ which explored the possible ramifications of a bankruptcy filing by CIT Group. A collapse, the article said, “would hurl more trouble at an industry already hammered by the worst spending slump in decades.”
The AP story notes that “industry experts say that any short-term disruption in financing by CIT could ripple throughout the industry.” Reichwald is one of the authorities who weighs-in on New York-based CIT, which fills a crucial role in the retail industry by helping companies that make items get paid faster by the stores that sell them. “It does this,” according to the AP story, “by providing short-term financing, mostly to small- to medium-sized businesses that can't afford to wait the typical 60 to 90 days it takes to get paid by retailers.”
Retail industry insiders argue, according to the AP, that with other lenders already under financial strain, many CIT clients may lose their financing options. That could lead to another flurry of bankruptcies.
Reichwald notes that CIT has been refusing requests from manufacturers to withdraw credit balances – the equivalent of bank deposits, except that they are not federally insured.
The AP story was picked up online by major outlets including Forbes, MSNBC, CNBC, ABC News, and Salon.com.
Read the full article here.