CIT in talks to avoid bankruptcy

 CIT Group Inc was in talks with a bondholder group on Saturday, as the lender tried to hammer out a rescue financing deal before markets opened and avoid bankruptcy, a source close to the situation said.

Talks with the bondholder group, advised by investment bank Houlihan Lokey, for a $2 billion to $3 billion financing were expected to continue with the aim of announcing a deal by Monday morning, the source said.

If a deal is not reached, the 101-year-old lender that services nearly one million small- and mid-sized businesses could file for bankruptcy protection as soon as Monday, according to the source, who did not want to be identified because talks are private.

Talks are also going on a parallel track for debtor-in-possession (DIP) financing if the lender has to file for bankruptcy, the source said.

JPMorgan Chase & Co, Goldman Sachs Group Inc, Barclays PLC and Morgan Stanley, which is also advising the company, might take part in a DIP financing, the source said. CIT spokesman Curt Ritter declined to comment