(CIT story updated with additional analyst commentary on CIT's emergence from bankruptcy.)
NEW YORK (
is surging on its first day of trading after emerging from bankruptcy protection.
Shares of the lender are spiking 10% to $28.05, after opening at $25.50.
CIT pulled out of bankruptcy in just six weeks. The company was forced into bankruptcy on Nov. 1 after it failed to raise enough cash to repay its debt.
Few financial companies have been able to emerge from bankruptcy, especially as quickly as CIT has. This is a big positive, says Randy Marshall, founding managing director at Protiviti, a global consulting and internal auditing firm.
"Once you have a brand that goes into bankruptcy, history shows that's usually it," he says. "It is significant that CIT has even gotten to this stage, which makes me optimistic.
Still, CIT faces some challenges. "It is a tough market to come back into, and their relationship with their customers will surely be a struggle," says Michael Gallo, partner at law firm DeCotiis, FitzPatrick, Cole & Wisler, and head of the Banking Law practice group.
Understandably, few customers want to do business with companies that have been in bankruptcy, fearing their financing will not be safe.
Clients may also be pressing for improved pricing, Marshall says, which could put pressure on CIT's margins.
The lender must also transition its board and management team. It announced seven new directors on its 13 member board, leaving open the question of the strategic direction of the company, Marshall says.
But ultimately, both Gallo and Marshall say CIT will be able to rebound and makeover its image.
-- Reported by Jeanine Poggi in New York.
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