CIT goes bankrupt, feds' $2.3 billion bailout gone

CIT is the first firm to fail after being bailed out by the government…

Under the bankruptcy plan, CIT bondholders would recover 70 cents on the dollar in new notes and equity in the reorganized company. But the government, whose investment was in the form of preferred shares, probably would recover nothing.

The $2.3 billion rescue by taxpayers was made last December. Facing mounting losses, CIT sought additional federal funding in July. But government officials declined after determining that the firm’s collapse would not significantly disrupt the economy’s recovery.