CIT Raises Cost Estimates For Litigation
In its most recent 10-K filing, CIT notes that it currently estimates the range of reasonably possible losses as up to $360 million in excess of established reserves and insurance related to various legal matters. CIT said the actual results may vary “significantly” from this estimate.
In addition to a legal proceedings involving securities litigation against the company and former executives by its pre-bankruptcy shareholders, the company is involved in tax litigation with former parent Tyco International pursuant to an agreement under which CIT agreed to pay Tyco for tax savings actually realized by CIT, if any, as a result of the use of certain net operating losses arising during the period that Tyco owned CIT.
In December 2011, the bankruptcy court denied CIT’s request to subordinate Tyco’s interests. CIT has appealed the decision and filed a motion essentially seeking to stay any proceeding to determine the amount of Tyco’s alleged contractual damages.
CIT is also involved in litigation involving bankrupt Le-Nature’s, a beverage bottler, for a newly constructed bottling facility in Arizona. CIT was the lead lessor under a syndicated equipment lease agreement. Subsequent to commencement of the Le-Nature’s bankruptcy, certain co-lessors and other parties that participated in CIT’s and other co-lessors interests in the lease filed lawsuits against CIT and others to recover the balance of their respective investments. Plaintiffs are seeking damages in excess of $84 million as well as claims for treble damages under RICO.
Previously on abfjournal.com: