Last week, CIT group filed for Chapter 11 bankruptcy protection. CIT group is America’s leading company in lending to SME, but has also as clients 80% of the companies listed in the Fortune 1000, such as Microsoft and Dell.
In the short term, the collapse of a 101 years old company, which survives two World Wars and the Great Depression, will be a blow for the American economy that relies on SME. In the long term, the management team hopes that this is going to enable the group to recover itself.It’s the fifth biggest bankruptcy in American history, after it of Lehman Brothers ($ 691 billion), Washington Mutual ($ 327.9 billion) in 2008, WorldCom ($ 103.9 billion) in 2002 and General Motors ($ 91 billion) in 2009.
In December 2008, American Treasury lend the group $ 2.3 billion but refuse, this summer, to support the group again. They had $71 billion of assets and $64.9 billion of liabilities on June 30. However, they strongly believe that under the court protection, they will be able to re-emerge by the end the year by reducing them debt by $10 billion due to their reorganization plan. This was supported by the majority of the creditors of the group. Indeed, 85% of them participated in the consultation and nearly 90% of those involved have supported the reorganization program.
As a matter a facts, the group tried and actually succeeds in convincing the shareholder, investors and stakeholder that the group will restructure itself under Chapter 11 protection. Nevertheless, until now, only a few companies have succeeded to avoid the bankruptcy after filling Chapter 11. This goes particularly for financial companies.
Despite the fact that in the short term, the company may lose some of its costumers, who are going to be taking over by other lenders, this case is going to be, from my point of view, a good test to see if a company can survive a Chapter 11 filing,
Even if the group said that only its holding company was filing for bankruptcy, and that most of its important operating subsidiaries would continue to operate normally, I’m not totally convince that the group will re-emerge after Chapter 11 filing. I have several reasons for that. First of all, the confidence of the stakeholders has plunged dramatically at the moment they announced the Chapter 11 filing. This confidence, particularly if the top management doesn't change, will be very difficult to restore. Secondly, as I said below, most of the costumers will switch to another lender, that can be trusted. Nobody wants to work with a failing company. Finally, to restructure a company, you need time and money. That’s exactly what they don’t have.
This news was covered by most of the international newspapers as well as by the “local press”. I will first separate the international press in two parts. On the one side, we have The NY times, The Times and Le Monde and on the other side Reuters that has a quiet different way to report the news. Moreover, we will have a look at The Daily Mail and L’echo. Both are local presses, but also here we have two different ways to report the news.
The New York Times published several articles during the week. One of those was “CIT Reaches Agreements to Ease Bankruptcy Filing” (M. J. de la Merced, Oct 30th). Those articles were relatively positive, talking about the hope of recovering of CIT group, while they avoided to talk about the taxpayers’ losses of $ 2.3 billion. However,apart from this, I was impressed by the objectivity of the articles, which could be far more bias knowing the NY Times is an American press organization. Moreover, they structured their story and comments around facts and numbers, which give them some credits.
Le Monde wrote “CIT Group, le géant américain du crédit aux PME, dépose son bilan” (A. Faujas, Nov. 2th). It this article, Le Monde didn't use a lot of numbers to give strength to their arguments. They only reported the news quoting some analyst from Bloomberg. From my point of view, it was definitely not the best article. It was too vague, giving just some approximated facts without getting deeper into the subject. I was quiet disappointed of the quality of the news story, which are usually far better.
The Times published a really negative headline “CIT bankruptcy filing will cost US taxpayers another $2.3bn” (H. Power & A. Frean, Nov. 2th), which underlines the fact that again the “normal” citizens will pay for the cupidity of the bankers. By contrast, the article itself was not that negative, even if I could feel that it was quiet subjective in some way.
The three media organization reported the new story as a story. When you compare it with Reuters news story, we can find out that the purpose of the authors are not the same. The three fist media organization are writing articles not only to inform people, but to inform them in a friendly way, telling them a story.
On the other hand, we have Reuter that published also several articles this week. One of them was “CIT bankruptcy reassigned after recusal” (C. Emery & J. Stempel; editing by J. Wallace, Nov. 2th). It starts its article by a summary of the important points in bullet point, presenting facts and numbers with short analysis. As I said below, they are going straight to the point, without trying to entertain the reader. If you are looking for more crude information, Reuter is definitely the place to go.
What concerns the local press, L’echo, which is a Belgian newspaper, published “Le Groupe Cit depose le bilan” (Nov. 1th). For a local newspaper, the quality of the information was good. They took as source Reuter and the Financial Times which are two trusted sources to give them credits. It was simply written and complete.
By contrast, the Daily Mail article (“£1.8bn bondholder loan saves CIT Group from bankruptcy), was from my point of view, the worst. They didn’t write important facts and if you hadn’t read anything before about this news, you couldn’t understand what was going on with CIT group only by reading this article. It contains 10 sentences with a big unrelated picture.
To conclude, I would recommend to read The Times and The New York Times to have a balance view of the news story. Both articles covered the news fully, giving credits to their analysis with facts and numbers. I would definitely avoid tabloid, which are far away the worst for that kind of news.
Q. Piloy
Sources:
http://www.reuters.com/article/newsOne/idUSTRE5A01NX20091102
http://www.reuters.com/article/financialsSector/idUSN0243413120091102
http://www.lemonde.fr/la-crise-financiere/article/2009/11/02/cit-group-le-geant-americain-du-credit-aux-pme-depose-son-bilan_1261610_1101386.html#ens_id=863164
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6898854.ece
http://www.nytimes.com/2009/11/02/business/economy/02cit.html?ref=business
http://www.nytimes.com/2009/10/31/business/31cit.html?fta=y
http://www.lecho.be/nieuws/archief/Le_groupe_CIT_depose_le_bilan-.8254239-1802.art?highlight=CIT
http://www.dailymail.co.uk/money/article-1200921/3bn-bondholder-loan-saves-CIT-Group-bankruptcy.html]
As a matter a facts, the group tried and actually succeeds in convincing the shareholder, investors and stakeholder that the group will restructure itself under Chapter 11 protection. Nevertheless, until now, only a few companies have succeeded to avoid the bankruptcy after filling Chapter 11. This goes particularly for financial companies.
Despite the fact that in the short term, the company may lose some of its costumers, who are going to be taking over by other lenders, this case is going to be, from my point of view, a good test to see if a company can survive a Chapter 11 filing,
Even if the group said that only its holding company was filing for bankruptcy, and that most of its important operating subsidiaries would continue to operate normally, I’m not totally convince that the group will re-emerge after Chapter 11 filing. I have several reasons for that. First of all, the confidence of the stakeholders has plunged dramatically at the moment they announced the Chapter 11 filing. This confidence, particularly if the top management doesn't change, will be very difficult to restore. Secondly, as I said below, most of the costumers will switch to another lender, that can be trusted. Nobody wants to work with a failing company. Finally, to restructure a company, you need time and money. That’s exactly what they don’t have.
This news was covered by most of the international newspapers as well as by the “local press”. I will first separate the international press in two parts. On the one side, we have The NY times, The Times and Le Monde and on the other side Reuters that has a quiet different way to report the news. Moreover, we will have a look at The Daily Mail and L’echo. Both are local presses, but also here we have two different ways to report the news.
The New York Times published several articles during the week. One of those was “CIT Reaches Agreements to Ease Bankruptcy Filing” (M. J. de la Merced, Oct 30th). Those articles were relatively positive, talking about the hope of recovering of CIT group, while they avoided to talk about the taxpayers’ losses of $ 2.3 billion. However,apart from this, I was impressed by the objectivity of the articles, which could be far more bias knowing the NY Times is an American press organization. Moreover, they structured their story and comments around facts and numbers, which give them some credits.
Le Monde wrote “CIT Group, le géant américain du crédit aux PME, dépose son bilan” (A. Faujas, Nov. 2th). It this article, Le Monde didn't use a lot of numbers to give strength to their arguments. They only reported the news quoting some analyst from Bloomberg. From my point of view, it was definitely not the best article. It was too vague, giving just some approximated facts without getting deeper into the subject. I was quiet disappointed of the quality of the news story, which are usually far better.
The Times published a really negative headline “CIT bankruptcy filing will cost US taxpayers another $2.3bn” (H. Power & A. Frean, Nov. 2th), which underlines the fact that again the “normal” citizens will pay for the cupidity of the bankers. By contrast, the article itself was not that negative, even if I could feel that it was quiet subjective in some way.
The three media organization reported the new story as a story. When you compare it with Reuters news story, we can find out that the purpose of the authors are not the same. The three fist media organization are writing articles not only to inform people, but to inform them in a friendly way, telling them a story.
On the other hand, we have Reuter that published also several articles this week. One of them was “CIT bankruptcy reassigned after recusal” (C. Emery & J. Stempel; editing by J. Wallace, Nov. 2th). It starts its article by a summary of the important points in bullet point, presenting facts and numbers with short analysis. As I said below, they are going straight to the point, without trying to entertain the reader. If you are looking for more crude information, Reuter is definitely the place to go.
What concerns the local press, L’echo, which is a Belgian newspaper, published “Le Groupe Cit depose le bilan” (Nov. 1th). For a local newspaper, the quality of the information was good. They took as source Reuter and the Financial Times which are two trusted sources to give them credits. It was simply written and complete.
By contrast, the Daily Mail article (“£1.8bn bondholder loan saves CIT Group from bankruptcy), was from my point of view, the worst. They didn’t write important facts and if you hadn’t read anything before about this news, you couldn’t understand what was going on with CIT group only by reading this article. It contains 10 sentences with a big unrelated picture.
To conclude, I would recommend to read The Times and The New York Times to have a balance view of the news story. Both articles covered the news fully, giving credits to their analysis with facts and numbers. I would definitely avoid tabloid, which are far away the worst for that kind of news.
Q. Piloy
Sources:
http://www.reuters.com/article/newsOne/idUSTRE5A01NX20091102
http://www.reuters.com/article/financialsSector/idUSN0243413120091102
http://www.lemonde.fr/la-crise-financiere/article/2009/11/02/cit-group-le-geant-americain-du-credit-aux-pme-depose-son-bilan_1261610_1101386.html#ens_id=863164
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6898854.ece
http://www.nytimes.com/2009/11/02/business/economy/02cit.html?ref=business
http://www.nytimes.com/2009/10/31/business/31cit.html?fta=y
http://www.lecho.be/nieuws/archief/Le_groupe_CIT_depose_le_bilan-.8254239-1802.art?highlight=CIT
http://www.dailymail.co.uk/money/article-1200921/3bn-bondholder-loan-saves-CIT-Group-bankruptcy.html]
No comments:
Post a Comment