CIT says factoring unaffected by Chapter 11 filing
Official says it's ‘business as usual'
Clint Engel -- Furniture Today -- Home Accents Today, 11/3/2009 8:30:00 AM
A CIT director, who oversees the bulk of the company's furniture factoring business, said Monday that the prepackaged Chapter 11 filing of parent holding company CIT Group doesn't affect the factoring business for CIT or its furniture clients.
Terry Oelschlaeger, managing director of CIT Commercial Services' Charlotte, N.C.-based regional office, said his business unit is one of the operating subsidiaries that isn't part of the Chapter 11 filing, is adequately funded and "continues to do business as usual."
"It hasn't impacted what we do for our clients nor has is impacted what our clients are doing with us," he said. Factors lend to companies based on their accounts receivable.
CIT's woes, however, have led some of CIT's factoring clients to take their business elsewhere, including La-Z-Boy's England upholstery operation, which now handles retail credit through La-Z-Boy's in-house credit department in High Point. Oelschlaeger confirmed that move but said he couldn't speak to the reasons for it or whether it is temporary or permanent.
"At any given point in time we lose clients and we gain clients," he said. "The majority continues to do business with CIT as in the past, and we have continued to solicit new business in the furniture industry throughout 2009."
New York-based CIT Group and CIT Funding Company of Delaware LLC filed for bankruptcy Sunday after bondholders rejected an alternative debt exchange offer and voted overwhelmingly for the prepackaged bankruptcy plan.
The struggling company, a major lender to small and midsized businesses, listed $71 billion in assets and $64.9 billion in liabilities, and said it expects the move to reduce its debt load by about $10 billion. It said it expects to emerge from bankruptcy quickly.
Oelschlaeger wouldn't say how large CIT's factoring business is, but said CIT is "perhaps the largest" in the furniture industry with client companies numbering in the hundreds.
Asked what's next for the factoring business and whether it is likely to be sold by CIT Group, Oelschlaeger declined to comment.
Oelschlaeger said he spent most of Monday morning on the phone with customers who "are relieved that we were not part of the bankruptcy filing, and they continue to be very supportive of what we do and have expressed to me a high level of appreciation for the services we provide."
Ray Steele, vice president of sales for Ultimate Accents, said that the accent furniture source has seen no change in funding availability from CIT Group.
"As far as currently, we submit and they pay," he said. "It's not that we wouldn't look at another factor, but if CIT continues onward and upward there's no reason for us to switch."
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