Rochester, NY 8/7/2009 6:35:42 PM
CIT - Scherr Files Lawsuit Against CIT
CIT GROUP INC (DEL)
CIT GROUP INC (DEL), CIT
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Scherr Inc a small clothing maker filed a lawsuit last week against CIT Group, saying that the lender's financial problems and possible bankruptcy are threatening its business. Scherr, based in Livingston, N.J., said in court documents that CIT has not been able to give it the assurances it needs that it will hold up its end of the "factoring agreement" it signed earlier this year. Scherr asked the court to terminate that agreement.
In a factoring agreement, the lender buys a client's accounts receivables at a discount, with the discounted amount of each account receivable payable to the client when the full amount is paid by the client's customer. In some cases, if the customer does not pay by a certain date, the lender is committed to paying the client.
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