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Oaktree and the Restructuring of CIT Group (A) Case Solution & Answer

CIT Prepackaged bankruptcy marked the first time a major financial institution was able to successfully restructure and exit Chapter 11 bankruptcy, challenging the conventional wisdom that the finance company could not survive bankruptcy as a business. A diverse group of private investors who had accumulated a large position in the CIT in the pre-restructuring period has played a central role in the success of this restructuring. If the protagonist is Rajath Shourie, Director General of Oaktree Capital Management. Shourie assess the possibility of extending a line of credit emergency 3 billion dollars of CIT, with five other major creditors of the troubled bank. The decision only a day after CIT was denied access to the program of temporary liquidity guarantee (TLGP). This case provides a platform to discuss what constitutes a good attractive target afflicted. (At the same time, students can gain a deeper insight into the business models of alternative funding from donors, including banks and financial companies.) The second important aspect of the case concerns the investment strategies of distressed debt, and provides an illustration of the transformation of an investment in government bonds in a position of control over the management of ICT and restructuring.
by
Victoria Ivashina,
David S. Scharfstein
Source: Harvard Business School
18 pages.
Release Date: October 8, 2013. Prod #: 214035-PDF-ENG
Oaktree and restructuring of CIT Group (A) of the solution of the case

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