Is CIT Throwing in the Towel?

by Christopher Menkin

January 11, 2005, CIT Technology Financing Services, Inc. (“CIT') agreed to forgive $4.36 million owed by 255 New Jersey customers and then in New York, $4.2 million, 90 percent of the contract.

It looks like CIT has decided they do not want to pursue the bad debt, that they have written off to the Security Exchange Commission and facing action by various state attorneys general office, as well as possible action by the Federal Trade Commission, wants out everywhere:

“Received this notice from CIT on Tuesday on both of my NorVergence lease accounts.  Stating pursuant to an agreement with the Fl AG, CIT is offering a Settlement Program for us to pay off all outstanding balances on our Rental Agreement at a substantial discount.  It goes on to state that if we choose not to participate in this settlement, CIT is free to enforce the terms of the original Rental Agreement.

” They are forgiving 100% of the remaining principal balance as of
7/15/04, forgiving late fees or penalties, forgiving insurance
charges, giving full credit for payments made to CIT after 7/15/04
and they will withdraw any and all adverse credit reports they filed.

” They are looking for $489.26 X 2 of which I had two separate
contracts for my two business locations. 

” If I do not choose to participate they will enforce the terms of the
Rental Agreement but they will not institute any legal proceedings
against us in any court outside of Florida.”

Leasing News has attempted to reach CIT for a comment, but it appears their policy is not to comment on legal matters, except in disclosures to the Security Exchange Commission.

Many of these leases have already past the non-accrual stage and have been classified by auditors as “write off.” While the assets have been in deed written off the books, many of the leases are in legal or collection phases with the hopes of at least 20% recovery, it is reported. As you can see in these recent cases, the larger lessors have decided it is more prudent to reach a mutual agreement such as GE Capital and it appears CIT, too. Look for Partners Equity, Preferred Lease, and others of the 45 leasing companies who feel victim to NorVergence leases to follow the GE Capital lead, who were the first to settle in New York State, December 6,2004.

From a random sampling of the current attitude, the hawk field will be left primarily to Popular Leasing USA in Missouri where they believe the commercial laws of the state are more to their favor. However, the recent ruling of including NorVergence in the legal battle may have repercussions with those who believe they have “hell and high water” contracts, and excuse the mixing metaphors, that are also “bullet proof.”
http://www.leasingnews.org/Conscious-Top%20Stories/Novergence_60.htm
http://www.leasingnews.org/Conscious-Top%20Stories/Novergence_68.htm

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Point of Information---CIT Throwing in the Towel

Leasing News wrote about CIT Financial offering one NorVergence customer in Florida 100%, whereas other offers have been 90% or less in other states.

CIT Financial did not comment on the article, nor were we able to substantiate the offer, and in addition, there may have been other circumstances surrounding the two leases that were offered 100%

This comment from a deputy attorney general who does not want to be named:

“...nice article about the GECC settlement and CIT. The 100% CIT walk away, I think, is a Florida-only settlement. Other settlements coming down are lower.”

And another deputy attorney general, who also does not want to be named:

“... it's a tier deal, meaning only a few got 100% while most others got less (and had to pay something to settle).”