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CIT Group

continues to generate conflicting headlines as the lender struggles to stay out of bankruptcy ahead of an Oct. 29 deadline to reduce its debt by more than $5 billion.

Late Wednesday,



Bank of America

(BAC) - Get Free Report

was close to arranging a loan of between $3.5 billion and $6 billion to keep CIT out of bankruptcy.

The report raises more questions than it answers. For example, which party or parties are taking most of the risk, and why? It is hard to imagine BofA would be willing to make a loan of that magnitude to a company in as precarious a position as CIT without getting some sort of collateral for security -- especially with CIT's management in flux after news earlier this week of CEO Jeffrey Peek's plans to


at the end of the year.

But CIT has already pledged a boatload of its assets to a group of six debt holders, including



Baupost Group


Centerbridge Partners


Oaktree Capital Management


Capital Research & Management


Silver Point Capital

. Those firms comprised a steering committee of lenders that was supposed to shepherd CIT through a restructuring to keep it out of bankruptcy. Adding to the confusion, reports came out in early October, a month after the fact, that PIMCO and Baupost had quit the committee, and the status of their bond holdings is unclear.

Then Thursday morning,

Bloomberg News


CIT is looking to amend the terms of the $29 billion debt exchange it unveiled on Oct. 1. The


report said a loan of $3 billion to $6 billion would come from the same six debt holders that extended an earlier loan to keep CIT afloat this summer.

CIT's bonds due Nov. 3 rallied slightly Thursday, the


report said, but remain more than 10% below where they traded before the proposed exchange was announced.

Meanwhile, the shares continues to bounce around on heavy volumes, despite a widespread view they are likely to be close to worthless in virtually any scenario imaginable for the company. The stock traded as low as 85 cents on Tuesday following the news of Peek's planned departure, but then rallied the next two sessions to close at $1.18 on Thursday.


Written by Dan Freed in New York