Home / Knowledge / News / Apparel/Garments / Garment companies to get deeply impacted by CIT bankruptcy, AEPC
Garment companies to get deeply impacted by CIT bankruptcy, AEPC
Nov '09
Indian garment exporters could get severely impacted as thousands of small and medium-sized businesses in the United States face financial difficulties and could go out of business after lender CIT Group Inc filed for bankruptcy protection, the Apparel Export Promotion Council (AEPC) said.

Nearly 80 per cent of Indian exporters service small US vendors. "Given their very high exposure to smaller vendors, the impact on Indian firms may be significant," said AEPC chairman Rakesh Vaid.

"It is definitely going to impact India's exports to the United States which is our largest destination." Most importantly, he said, credit terms may worsen and thereby impact Indian exporters.

Of the 10.17 billion dollar annual garment exports out of India, nearly three billion dollars are to the United States.

CIT is the largest factoring firm to the apparel sector, responsible for an estimated 60 percent of factoring in the US apparel and footwear industry. Giants such as Liz Claiborne Inc, one of the reported clients of CIT, may not be so badly hit with other financing options in banks.

But the smaller companies will get deeply impacted, especially due to lack of option for financing. As per Standard & Poor's estimate, CIT lent about four billion dollars to US apparel manufacturers and retailers last year.

Although the company will keep operating, it is unlikely to be able to make the same number of loans as before. CIT provides working capital to small firms such as shops, their suppliers and restaurants -- many of whom are already struggling in the current economic recession.

In one of the biggest corporate failures in US history, CIT made its filing in the New York bankruptcy court on November 1 after a debt-exchange offer to bond holders failed. CIT, a 101-year-old commercial lender, said most of its bond holders have agreed a pre-packaged reorganisation plan which will reduce total debt by 10 billion dollars while allowing the company to continue to do business.

The collapse is also bad news for US taxpayers who stand to lose the 2.3 billion dollars provided last year to prop up the troubled lender. With 71 billion dollars in assets, the company serves 2,000 vendors that supply merchandise to 300,000 stores, according to the US National Retail Federation.

Sunday's Chapter 11 bankruptcy filing is one of the biggest in US corporate history with total liabilities of 64.9 billion dollars.

It came after the collapse of German retail group Arcandor in June because the banks had cut off all sources of credit. The German government too had rejected all requests for financial assistance to Arcandor which owns the Karstadt department store chain and Quelle mail order firm.

The AEPC has been exploring ways with sourcing agent Li & Fung to reduce losses incurred by Indian apparel exporters after Arcandor filed for bankruptcy. The Hong Kong-based group has offered to help exporters by entering into long-term commitments and reaching more buyers.

Must ReadView All

Textiles | On 1st May 2017

FESPA to showcase digital, screen, textile industries

Stage is set for FESPA 2017 at the Hamburg Messe, Germany during May...

Textiles | On 30th Apr 2017

Government revamping tech mission on cotton

Indian Government is working to revamp the technology mission on...

Apparel/Garments | On 30th Apr 2017

Columbia Sportswear records Q1 net sales of $543.8 mn

Columbia Sportswear Company has announced record net sales of $543.8...

Interviews View All

Mukesh Agarwal & Rajesh Agarwal
Madhuram Fincap Pvt Ltd

Increasing prices and lack of demand main issues facing industry

Yashiki Gumber
Sahiba Fabrics

Fabric does not restrict us from fashion trends

Frank Gossmann
Rotorcraft AG

‘RT3 motto is: Do not check millimetres, check colours.’

Iago Castro Asensio
RCfil Distribuciones S.L.

Iago Castro Asensio, International Business Manager of RCfil...

Giorgio Mantovani
Corman S.p.A

Giorgio Mantovani, MD of Corman, with a presence in both Milano and New...

Johan Berlin
InvestKonsult Sweden AB

Investkonsult Sweden AB has been buying and selling second-hand textile...

Silvia Venturini Fendi
Fendi s.r.l

"Yes, my confidence and positive attitude are my strengths and should be...

Madhu Jain
Madhu Jain

She grew up in the walled city of Old Delhi, completed her studies, and...

Ritu Kumar
Label Ritu Kumar

‘Classics will return’ "There are a lot of people wearing western clothes ...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


Letter To Editor

(Max. 8000 char.)

Search Companies


news category

Related Categories:
April 2017

April 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.


Browse Our Archives


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search