CIT Group Says CEO Peek Plans to Resign

CIT Group Inc., struggling as it continues efforts to restructure its debt, said Tuesday chairman and CEO Jeffrey M. Peek will resign at the end of the year.

FILE - In this April 27, 2006 file photo, Jeffrey Peek, Chairman and CEO of CIT Group Inc., talks...

FILE - In this April 27, 2006 file photo, Jeffrey Peek, Chairman and CEO of CIT Group Inc., talks during the dedication of the CIT global headquarters in New York. The business lender CIT Group said Tuesday, Oct. 13, 2009, Peek plans to resign at the end of the year. (AP Photo/Mark Lennihan, file)

(AP)

It is widely believed that the commercial lender, which has received $2.3 billion in federal bailout money, may be forced to seek bankruptcy court protection, and analysts said Peek's departure could be a sign that the company does plan a Chapter 11 filing that would enable it to reorganize its operations and finances.

Sameer Gokhale, a senior analyst at Keefe, Bruyette & Woods Inc. said that if CIT plans to reorganize, it would make sense to bring in a new CEO to run a new capitalized firm, he said.

It provides a "fresh start for the company," Gokhale said.

CIT is one of the largest lenders to small and mid-sized companies, and its customers range from Dunkin' Donuts franchisees to department store operator Dillards Inc. The company has suffered billions of dollars in losses as its borrowing costs outstripped the income it generates from lending to customers. As CIT's customers have struggled amid the recession, they have fallen behind on repaying loans, putting the company in the same predicament as many other financial institutions.

Some experts have warned that a collapse of CIT would deal a blow to an economy struggling to recover. The retail sector would be hit especially hard because CIT serves as a short-term financier to about 2,000 vendors that supply merchandise to 300,000 stores, according to the National Retail Federation. Analysts have said 60 percent of the apparel industry depends on CIT for financing.

CIT had $54.09 billion in outstanding long-term borrowings as of June 30, including $13.85 billion due by June 30, 2010. The company is trying to reduce its near-term debt burden by $5.7 billion.

CIT's shares fell 12 cents, or 11.5 percent, to close at 92 cents Tuesday.

Peek, 62, who has been with CIT Group since 2003, said in a statement the debt restructuring CIT is currently attempting, its second in recent months, makes this "the appropriate time to focus on a transition of leadership."