CIT Group (CIT), the troubled commercial lender, may be forced into bankruptcy if it can't complete a proposed deal to buy back $1 billion in debt from bondholders at a discount, it said today.

A group of CIT's bondholders has already given the company a $3 billion lifeline and don't plan on pushing the company over the brink, it said. Still, it may have few other options if it can't convince enough of its other debt investors to accept less than they're owed.
CIT's shares fell 21 percent in heavy trading by early afternoon. The bankruptcy warning came as part of its explanation for why it couldn't meet the deadline to file its official second-quarter results with the Securities and Exchange Commission.

It's the second time CIT missed a deadline to release the results. Late last month, CIT canceled a scheduled conference call with investors while disclosing that it lost at least $1.5 billion in the quarter.

Catering to small and medium-size businesses and depending heavily on short-term borrowing from hard-hit credit markets to fund its operations, CIT has been ravaged by the recession.

The crisis it's currently facing intensified last month, when the government said it couldn't participate in a program that guarantees bank debt. At the time, CIT executives said there was "no appreciable likelihood of additional government support being provided over the near term." Its stock fell 75 percent the next day.

In a July 21 filing, it said losses combined with difficulty borrowing money to finance its business meant there is "substantial doubt about its ability to continue as a growing concern," a warning it reiterated in today's announcement.

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