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NRF welcomes CIT deal with bondholders to avoid bankruptcy
21 Jul '09
2 min read
The National Retail Federation welcomed reports that CIT Group Inc has reached an arrangement with its bondholders that would allow the lender to avoid bankruptcy.
“It is encouraging to hear that CIT Group has reached an agreement with its bondholders to secure the funding needed to continue operations,” NRF President and CEO Tracy Mullin said. “This comes as a great relief to the many retailers who depend on this major lender for financing. As we have said from the beginning, CIT could not be allowed to fail at a time when retailers are already struggling to survive the national recession. The news that CIT will be able to continue operations will be one less uncertainty for retailers about to embark on the all-important back-to-school and holiday shopping seasons.”
CIT is one of the few lenders who provide “factor” financing, serving about 2,000 small and mid-sized vendors who supply about 300,000 U.S. retailers with merchandise sold in their stores. Vendors typically accept orders from retailers with an agreement to be paid in 60 to 90 days.
They then sell their accounts receivable to a factor in order to obtain the short-term financing needed to produce the goods ordered. Without factors, suppliers could be forced to shut their doors, or retailers would be required to pay up front and draw down on their own credit lines at a time when credit remains difficult to obtain.
The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry's key trading partners of retail goods and services.
“It is encouraging to hear that CIT Group has reached an agreement with its bondholders to secure the funding needed to continue operations,” NRF President and CEO Tracy Mullin said. “This comes as a great relief to the many retailers who depend on this major lender for financing. As we have said from the beginning, CIT could not be allowed to fail at a time when retailers are already struggling to survive the national recession. The news that CIT will be able to continue operations will be one less uncertainty for retailers about to embark on the all-important back-to-school and holiday shopping seasons.”
CIT is one of the few lenders who provide “factor” financing, serving about 2,000 small and mid-sized vendors who supply about 300,000 U.S. retailers with merchandise sold in their stores. Vendors typically accept orders from retailers with an agreement to be paid in 60 to 90 days.
They then sell their accounts receivable to a factor in order to obtain the short-term financing needed to produce the goods ordered. Without factors, suppliers could be forced to shut their doors, or retailers would be required to pay up front and draw down on their own credit lines at a time when credit remains difficult to obtain.
The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry's key trading partners of retail goods and services.
National Retail Federation
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