4. CIT Group ( CIT) After weathering the worst of the credit crisis, CIT Group ( CIT) a commercial lender to small and midsized businesses with a 101 year history filed for bankruptcy after negotiations on a debt-for-equity exchange with its creditors failed. For stock investors, which included the U.S. Treasury after a $2.3 billion bailout investment, the bankruptcy meant a wipe out of shares. With $71 billion in assets and $64.9 billion in debt, the bankruptcy was the fifth largest corporate bankruptcy at the time. However, the lender entered a pre-packaged bankruptcy in agreement with its lenders, in a move to try and stabilize any flight from its capital markets business as it renegotiated roughly $10 billion in debt. "Disruptions in the credit markets coupled with the global economic deterioration that began in 2007, and downgrades in the company's credit ratings" hindered the company's ability to finance its operations, the company said in a regulatory filing. Nevertheless, CIT was quickly able to re-emerge from bankruptcy with a more manageable debt. Only a month after its bankruptcy filing, CIT won approval to exit bankruptcy having reduced its debt by $10.5 billion to $55 billion and extending other liabilities by three years, improving the company's liquidity. In exchange for their claims, unsecured CIT creditors were given a 70 cent on the dollar repayment and new equity in the lender. Shareholders, including the U.S. Treasury were wiped out. In its market debut, the company's shares surged as much as 10% to $29.64. Since then the company's stock has gained nearly a third, on an improving outlook for its business. Meanwhile, bank competitors like Bank of America ( BAC) and Citigroup ( C), and financing competitor GE Capital have seen a weaker stock performance. In February, the company and its chief executive John Thain, the former Goldman Sachs executive and Merrill Lynch head, decided to buy back $4 billion in debt needed during its bankruptcy exit, in a push to gain investment grade credit ratings. "This is a significant milestone for CIT," said Thain in the statement, noting an improved financial flexibility. At the time, the company's credit ratings were B2 with a "stable" outlook from Moody's and B+ with a "positive" outlook from S&P. After the debt deal, Guggenheim Partners analyst Jeff Davis noted that the move will lower CIT's cost of capital, but a change to "frest start" accounting treatment may depress its GAAP earnings. As CIT's ratings improve, Davis says that the company may return to the bond markets to refinance $9 billion of upcoming debt maturities. For now, he notes that investors should focus on the company's pre-tax earnings and its $4 billion in unused net operating loss provisions, which could boost earnings. "We believe investors are better served by focusing on pre-tax, pre-FSA earnings given the FSA issue and ~$4 billion of NOLs that have yet to be materially utilized," wrote Davis in a Feb. 13 note. He rates CIT shares "neutral" with a $39 a share price target. CIT Group is expected see its profitability increase dramatically in 2012 and 2013, according to consensus analyst estimates compiled by Bloomberg. The lender is expected to earn $225 million in profit on revenue of $1.75 billion in 2012 and benefit from sales above $2 billion in 2013, which will more than double profits to over $600 million. Analysts polled by Bloomberg give CIT Group shares a $44 a share price target, with 11 "buy" recommendations to go with 7 "holds" and 1 "sell."