The Jailhouse

[JohnnyWinter]

CIT Group Interim Order Under 11 U.S.C. §§ 105, 362, and 541 and Fed. R. Bankr. P. 3001 and 3002 Establishing Notice and Hearing Procedures for Trading in Equity Securities and Claims Against the Debtors' Estates

http://www.kccllc.net/documents/0916565/0916565091103000000000013.pdf


The above document was filed and signed by/s/ Allan L. Gropper
UNITED STATES BANKRUPTCY JUDGE in the CIT Bankruptcy.

The order relates to transfer of equity and is the same kind of trading order that gets put in place in all bankruptcies in order to protect the debtors' NOLs. Please be advised that CIT is cancelling their equity through a pre-packaged bankruptcy, so just because a trading order was put in place to preserve the NOLs does not mean that the company plans on "keeping commons alive".

This is a great example , or a very recent case, that shows how companies can retain their NOLs while still cancelling their equity, and this should put to rest any rubbish about companies losing their NOLs if they cancel their equity. It also shows that simply because a trading order gets put in place, it does not indicate that the company is planning on keeping commons in tact.


"ORDERED, ADJUDGED, AND DECREED THAT:

1. The Motion is GRANTED on an interim basis as set forth in this Order.
2. Any purchase, sale, or other transfer of CIT equity securities or claims
against the Debtors in violation of the procedures set forth herein shall be null and void ab initio
as an act in violation of the automatic stay under Bankruptcy Code sections 362 and 105(a).
3. The following procedures shall apply to trading in equity securities of CIT:
(a) Any person or entity (as defined in Treasury Regulations Section
1.382-3(a) for purposes of this Section 3) who currently owns CIT Stock (as defined in Section
(e)) in an amount sufficient to qualify such person or entity as a Substantial Shareholder (as
defined in Paragraph (e) below) or becomes a Substantial Shareholder shall file with this Court,
and serve on the Debtors and counsel to the Debtors, a notice of such status, in the form attached
hereto as Exhibit A-1, on or before (A) five (5) calendar days after the date of entry of this Order
or (B) five (5) calendar days after becoming a Substantial Shareholder.
(b) Prior to effectuating any transfer of equity securities (including
Options to acquire such securities, as defined in Paragraph (e) below) that would result in an
increase in the amount of CIT Stock beneficially owned by a Substantial Shareholder or would
result in a person or entity becoming a Substantial Shareholder, such Substantial Shareholder
shall file with this Court, and serve on counsel to the Debtors, advance written notice, in the form
attached hereto as Exhibit A-2, of the intended transfer of equity securities.
(c) Prior to effectuating any transfer of equity securities (including
Options to acquire such securities) that would result in a decrease in the amount of CIT Stock
beneficially owned by a Substantial Shareholder or would result in a person or entity ceasing to
be a Substantial Shareholder, such Substantial Shareholder shall file with this Court, and serve
on the Debtors and counsel to the Debtors, advance written notice, in the form attached hereto as
Exhibit A-3, of the intended transfer of equity securities (the notices required to be filed and
served under Paragraph (b) and this Paragraph (c), each a "Notice of Proposed Transfer").
(d) The Debtors shall have five (5) calendar days after receipt of a
Notice of Proposed Transfer to file with this Court and serve on such Substantial Shareholder an
objection to any proposed transfer of equity securities described in the Notice of Proposed
Transfer on the grounds that such transfer may adversely affect the Debtors' ability to utilize
their Tax Attributes. If the Debtors file an objection, such transaction will not be effective unless
approved by a final and nonappealable order of this Court. If the Debtors do not object within
such 5-day period, such transaction may proceed solely as set forth in the Notice of Proposed
Transfer. Further transactions within the scope of this paragraph must be the subject of
additional notices as set forth herein, each with an additional 5-day waiting period.
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(e) For purposes of this Order, (A) a "Substantial Shareholder" is any
person or entity which beneficially owns at least 9,500,000 shares of the common stock of CIT
("CIT Common Stock") (representing approximately 4.75% of all issued and outstanding
common shares) or who beneficially owns at least 4.50% of CIT 8.75% Non-Cumulative
Perpetual Convertible Preferred Stock, Series C ("Series C Convertible Preferred") as of the date
immediately prior to the date of filing of a Notice of Proposed Transfer (the CIT Common stock
and Series C Convertible Preferred, collectively, the "CIT Stock"), and (B) "beneficial
ownership" (or any variation thereof of CIT Stock and Options to acquire CIT Stock) shall be
determined in accordance with applicable rules under I.R.C. § 382, Treasury Regulations
promulgated thereunder and rulings issued by the Internal Revenue Service, and thus, to the
extent provided therein, from time to time shall include, without limitation, (i) direct and indirect
ownership (e.g., a holding company would be considered to beneficially own all shares owned or
acquired by its subsidiaries), (ii) ownership by such holder's family members and persons acting
in concert with such holder to make a coordinated acquisition of stock, and (iii) an Option to
acquire CIT Stock. An "Option" to acquire stock includes any contingent purchase, warrant,
convertible debt, put, stock subject to risk of forfeiture, contract to acquire stock, or similar
interest, regardless of whether it is contingent or otherwise not currently exercisable. For the
avoidance of doubt, by operation of the definition of beneficial ownership in clause (B) of this
Paragraph, an owner of an Option to acquire CIT Stock may be treated as the owner of such CIT
Stock.
4. The following procedures shall apply to trading in Claims of the Debtors:
(a) Any person or entity (as defined in Treasury Regulations Section
1.382-3(a) for purposes of this Section 4) who currently is or hereafter becomes a Substantial
Claimholder shall file with this Court (at the holder’s election, in a redacted form that does not
include such holder’s taxpayer identification number, the aggregate principal amount of Claims
that such holder beneficially owns and the date such Claims were acquired), and serve on the
Debtors and counsel to the Debtors, a notice of such status, in the form attached hereto as Exhibit
B-1, on or before (A) ten (10) calendar days after the date of entry of this Order or (B) ten (10)
calendar days after becoming a Substantial Claimholder.
(b) Prior to effectuating any acquisition or other transfer of Claims that
would result in (i) an increase in the dollar amount of Claims beneficially owned by a Substantial
Claimholder or (ii) a person or entity becoming a Substantial Claimholder (each a “Proposed
Claims Acquisition Transaction”), such person, entity, or Substantial Claimholder (each a
“Proposed Claims Transferee”) shall file with this Court (at the holder’s election, in a redacted
form that does not include such holder’s taxpayer identification number, the aggregate principal
amount of Claims that such holder beneficially owns and the date such Claims were acquired),
and serve on the Debtors and counsel to the Debtors, advance written notice (a “Notice of
Proposed Transfer”), in the form attached hereto as Exhibit B-2, of the intended transfer of
Claims.
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(c) The Debtors shall have five (5) calendar days after receipt of a
Notice of Proposed Transfer to file with this Court and serve on such Proposed Claims
Transferee an objection to any Proposed Claims Acquisition Transaction described in the Notice
of Proposed Transfer on the grounds that such transfer may adversely affect the Debtors' ability
to utilize their Tax Attributes. If the Debtors file an objection, such transaction will not be
effective unless approved by a final and nonappealable order of this Court. If the Debtors do not
object within such 5-day period, such transaction may proceed solely as set forth in the Notice of
Proposed Transfer. Further transactions within the scope of this paragraph must be the subject of
additional notices as set forth herein, each with an additional 5-day waiting period. The Debtors
shall bear the burden of establishing that the Proposed Claims Acquisition Transaction may
adversely effect the Debtors’ ability to utilize their Tax Attributes.
(d) Special Rules: (1) No person or entity shall be subject to the
advance notice provision contained in paragraph (b) with respect to any transfer described in
Treasury Regulation 1.382-9(d)(5)(ii), provided that such transfer is not for a principal purpose
of obtaining stock in the reorganized Debtors or permitting the transferee to benefit from the
losses of the Debtors within the meaning of Treasury Regulatory section 1.382-9(d)(5)(iii);
provided, further, that any such transferee who becomes a Substantial Claimholder shall file with
the Court (at the holder’s election, in a redacted form that does not include such holder’s
taxpayer identification number, the aggregate principal amount of Claims that such holder
beneficially owns and the date such Claims were acquired), and serve upon Debtors and Debtors’
counsel, a notice of such status, in the form attached hereto as Exhibit B-1, within ten (10)
calendar days of the later of (i) the entry of this Order and or (B) ten (10) calendar days after
becoming a Substantial Claimholder.
(e) For the avoidance of doubt, Section 382 of the I.R.C., the Treasury
Regulations promulgated thereunder, and all relevant IRS and judicial authority shall apply in
determining whether the Claims of several persons and/or entities must be aggregated when
testing for Substantial Claimholder Status.
(f) For purposes of Section 4 of this Order, the following definitions
shall apply:
(i) "Beneficial Ownership" of Claims shall be
determined in accordance with applicable rules under Section 382 of the I.R.C.
and regulations promulgated thereunder, as if such rules applied to Claims in the
same manner as they apply to equity except to the extent inconsistent with rules
and regulations specifically applicable to the ownership of Claims.
(ii) "Claim" shall have the meaning ascribed to that term
in section 101(5) of the Bankruptcy Code and includes, without limitation, a
lessor's right to any current or future payment under or arising out of any lease
with respect to which any Debtor is a lessee.
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(iii) “Class” means any separate class of Claims.
(iv) "Class 7 Claims" means Class 7 Claims as defined in
the Plan of Reorganization.
(v) "Class 8 Claims" means Class 8 Claims as defined in
the Plan of Reorganization.
(vi) "Class 9 Claims" means Class 9 Claims as defined in
the Plan of Reorganization.
(vii) "Class 11 Claims" means Class 11 Claims as defined
in the Plan of Reorganization.
(viii) "Class 12 Claims" means Class 12 Claims as defined
in the Plan of Reorganization.
(ix) “Substantial Claimholder” means a person or entity
that beneficially owns, or any entity controlled by such person or entity through
which such person or entity beneficially owns, (i) with respect to any single Class
of Claims, a dollar amount of Claims of such Class of more than the Threshold
Amount (as defined below) for such Class of Claims or (ii) with respect to two or
more Classes of Claims, an amount of Claims such that the person’s or entity’s
Maximum Total Ownership, as computed on the form attached hereto as Annex 1
to Exhibit B-1 and Exhibit B-2 (the “Multi-Class Claimholder Worksheet”), is
equal to or greater than 4.75%.
(x) “Threshold Amount” means, for any single Class of
Claims, the amount of Claims set forth below:
Class Threshold Amount
Class 8 $1,429,660,000
Class 9 $1,430,420,000
Class 11 $1,430,230,000
Class 12 $753,930,000
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5. The Debtors may waive, in writing and in their sole and absolute discretion,
any and all restrictions, stays, and notification procedures contained in this Order.
6. Nothing in this Order shall be interpreted to prevent a secured party from
exercising the remedies available to it (whether arising under law or contract and including the
exercise by such secured party of any foreclosure rights), to the extent such remedies are not
otherwise prohibited by law.
7. Nothing in this Order shall preclude any party-in-interest from seeking
appropriate relief from the provisions of this Order.
8. The Debtors shall serve this Interim Order and the Notice of Order setting
forth the procedures authorized herein substantially in the form annexed hereto as Exhibit C on
(a) Office of the United States Trustee for the Southern District of New York (Attn: Paul K.
Schwartzberg), (b) the United States Treasury, (c) the Securities and Exchange Commission,
(d) the Internal Revenue Service, (e) the United States Attorney's Office for the Southern District
of New York, (f) any statutory committee appointed under Bankruptcy Code Section 1102, (g)
all parties who file notices of transfers of claims under Bankruptcy Rule 3001, (h) the indenture
trustees or the transfer agents for any CIT Stock or any bonds or debentures of the Debtors, and
(i) any person or entity that directly or indirectly owns, controls or holds 5% or more of CIT
Common Stock or Series C Convertible Preferred as determined based on filings of Schedule
13D and 13G with the Securities and Exchange Commission. Notice served pursuant to the
preceding sentence shall be via first class mail, postage prepaid. The Debtors shall also file a
copy of this Order as an exhibit to a report on Form 8-K filed with the Securities and Exchange
Commission. Additionally, the Debtors shall publish notice of this Order in substantially the
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form attached hereto as Exhibit D in The Wall Street Journal and The Financial Times (U.S.
edition) and on the Bloomberg newswire service. No further notice of entry of this Order need
be served by the Debtors.
9. Any transfer agent(s) for any CIT Stock having notice hereof shall provide
such Notice of Order to all holders of CIT Common Stock in excess of 9,500,000 shares and to
all holders of Series C Convertible Preferred in excess of 259,000 shares that are registered with
such transfer agent; provided that, if any transfer agent provides the Debtors with the name and
addresses of all holders of such CIT Stock, the Debtors shall deliver the Notice of Order to such
holders. Any such registered holder must, in turn, provide such Notice of Order to any holder for
whose account such registered holder holds CIT Common Stock in excess of 9,500,000 shares or
Series C Convertible Preferred in excess of 259,000 shares, and so on down the chain of
ownership.
10. Any person or entity or broker or agent acting on such person or entity's
behalf who sells an aggregate amount of 4,750,000 shares of CIT Common Stock or 129,500
shares of Series C Convertible Preferred (or an Option with respect thereto) or sells claims
against the Debtors in the aggregate principal amount of at least $15,800,000 to another person
or entity shall provide a copy of the Notice of Order to such purchaser of such claims or CIT
Stock or to any broker or agent acting on such purchaser's behalf, to the extent reasonably
feasible. The indenture trustees of any bonds or debentures of the Debtors shall provide a copy
of the Notice of Order to any person or entity that holds bonds or debentures of the Debtors of a
particular CUSIP/ISIN in the aggregate principal amount of at least $15,800,000.
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11. The requirements set forth in this Order are in addition to all applicable
securities, corporate and other laws, and do not excuse compliance therewith.
12. This Court shall retain jurisdiction with respect to all matters relating to the
interpretation or implementation of this Order.
13. The terms of this Order and the relief provided herein is granted on an
interim basis and shall not apply to Icahn Partners LP, Icahn Partners Master Fund, LP, Icahn
Partners Master Fund II LP, Icahn Partners Master Fund III LP, High River Limited Partnership
and their affiliates (collectively, the “Icahn Parties”). Final relief of the Motion, if granted, shall
not apply to the Icahn Parties.
14. Any objections to entry of a final order on the Motion must be (a) filed with
the Court no later than 4:00 p.m. (prevailing Eastern time) on November 19, 2009 (the
"Objection Deadline") and (b) served so as to be actually received by the following parties by the
Objection Deadline: (i) CIT Group Inc., 1 CIT Drive, Livingston, New Jersey 07039 (Attn: Eric
Mandelbaum); (ii) counsel for the Debtors, Skadden, Arps, Slate, Meagher & Flom LLP, Four
Times Square, New York, New York 10036 (Attn: Gregg M. Galardi and J. Gregory St. Clair);
(iii) the Office of the United States Trustee, 33 Whitehall Street, 21st Floor, New York, New
York 10004 (Attn: Paul K. Schwartzberg); (iv) counsel to Bank of America, N.A., as
Administrative Agent and Collateral Agent under the Senior Credit Facility; (v) Counsel to the
Lender Steering Committee; and (vi) counsel to any official committee(s) appointed in these
cases.
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15. A hearing shall be held to consider such objections on November 23, 2009
at 2:30 p.m. (prevailing Eastern Time). This Order shall remain in effect until such hearing and
unless otherwise ordered by this Court.
Dated: New York, New York
November 3, 2009
/s/ Allan L. Gropper
UNITED STATES BANKRUPTCY JUDGE
EXHIBIT A-1
Notice of"