Tips for updating employee handbooks from FSG Lawyers. SHACC to host launch book launch for "HOBIE: Master of Water, Wind and Waves." Sean Miller on A52 Warehouse partnership with Dakine. Now on Industry Insight.
Here's an AP story about the possible impact of a CIT bankruptcy or failure.
The National Retail Federation said earlier this week that CIT is "too big to fail," though the goverment subsequently declined to step in to bail CIT out.
According to the National Retail Federation, CIT is one of the few lenders who act as a "factor" for thousands of small and mid-sized vendors, including many in the action sports industry, who supply U.S. retailers with much of the merchandise sold in their stores. Vendors typically accept orders from retailers with an agreement to be paid in 90 days. They then sell their accounts receivable to a factor in order to obtain the short-term financing needed to produce the goods ordered. Without factors, suppliers could be forced to shut their doors or retailers would be required to pay up front and draw down on their own credit lines at a time when credit remains difficult to obtain.
"If CIT were to fail, a chain reaction would be set off that could very well leave retailers with a shortage of merchandise during the crucial holiday season this fall," NRF Terry Mullin said in a press release. "I strongly urge the (Administration) to take a very close look at the important role CIT plays in the retail industry and act appropriately to ensure that this essential lending institution remains economically viable. The jobs of countless hard-working Americans are at stake."
Here's the AP story:
Analyst: Potential CIT bankruptcy filing may disrupt deliveries to retailers
On Friday July 17, 2009, 9:23 am EDT
NEW YORK (AP) -- Some retailers have suppliers with exposure to commercial lender CIT, an analyst said Friday, which could slow or stall shipments to stores ahead of the crucial holiday shopping season.
CIT Group Inc. shares have sunk 80 percent in the past two weeks as investors fear the heavily indebted lender will have to file for bankruptcy protection.
"For our retailers, the issue is not direct financial impact but one of getting goods shipped," said FBR Capital Markets analyst Adrienne Tennant in a note to investors Friday.
She notes that while most retailers have told her a CIT bankruptcy filing would have "minimal to no impact" on key fall and holiday sales, some retailers may not even be aware they have vendors who are financed by CIT.
Clothing makers have already been having financial problems, leading to fears of less-diverse merchandise on store shelves -- another woe for apparel retailers already worried about the holiday season as rising unemployment threatens to constrain spending.
CIT serves more than 1 million customers, primarily small to mid-size businesses, including many in the retail sector. It often functions as a "factor" for retail suppliers, which means it buys the vendor's accounts receivables, or the money the company is owed by customers, and fronts the supplier cash to produce and ship its goods. In some cases, a retailer will then pay the factor -- CIT -- rather than its supplier.
Click here for the full story.