CIT files for Chapter 11 bankruptcy protection

WASHINGTON (AP) -- Lender CIT Group has filed for Chapter 11 bankruptcy protection, a potential blow to the thousands of small and mid-sized businesses that rely on the company for loans to keep their operations afloat.

CIT made its filing in New York bankruptcy court Sunday, after a debt-exchange offer to bondholders failed. CIT says the majority of its bondholders have approved a prepackaged reorganization plan which will reduce total debt by $10 billion while allowing the company to continue to do business.

CIT's move will wipe out current holders of its common and preferred stock, likely meaning the U.S. government will lose the $2.3 billion it sunk into CIT last year to prop up the ailing company.

The Chapter 11 filing is one of the biggest in U.S. corporate history.