Updated from Wednesday, July 15
could file from bankruptcy as early as tomorrow, after the lender said Wednesday night that it was unlikely it will receive a government.
The company is now seeking $2 to $3 billion in secured financing from private investors over the next day, according to the Associated Press.
Several private equity firms and fixed income investors have expressed interest in talking to CIT about providing financing that would be secured by some of the company's currently encumbered assets, such as airlines and rail cars.
But financing is dependent on approval from regulators to move assets from the finance company to its bank.
Late Wednesday CIT said "there is no appreciable likelihood" of new government support over the near-term, raising the specter of bankruptcy for the commercial lender.
CIT and federal regulators had been talking over the past several days about possibly securing a temporary government loan from the Treasury Department and
to allow the lender breathing room to strengthen its balance sheet. The company last weekend acknowledged it had secured the services of a law firm to help it prepare a potential bankruptcy filing.
Those talks proved fruitless, the company said in its statement.
"The company's board of directors and management, in consultation with its advisers, are evaluating alternatives," the company said.
The Treasury Department, in a statement, said the government needed to keep the threshold high for exceptional aid to individual companies, adding that the United States had a powerful set of financing mechanisms to help restart overall credit markets,
The temporary loan was one option being considered to give CIT room to strengthen its balance sheet. The extra time would allow CIT, one of the nation's largest lenders to small- and mid-sized businesses, to raise additional capital through debt or equity,
Other options considered included access to the Fed's discount window and asset transfers,
CIT has seen funding options disappear as investors shy away from purchasing all but the safest forms of debt. The lender has $7.4 billion in debt coming due in the first quarter of 2010, plus other obligations.
But if CIT is allowed to fail it could mean
disaster for other industries, like retail
, which depend on the lender for short-term financing.
Additional reporting by Joseph Woelfel.
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