CIT, the most important factoring institution for the fashion industry has been given another lifeline. After reports of bankruptcy, according to WWD, CIT has received a tentative $ 3 Billion dollar deal to avoid the potentially disastrous rippling effect that would be felt by the fashion community. CIT is the quintessential middleman for retailers and manufactures a like, whose business accounts for 60% of the fashion industry’s factoring volume.
The closing of this organization, would not only effect the thousands of direct clients CIT works with, but also, the thousands of fashion insiders who rely on factors as a necessary means to push business. Particularly, clients already are having a hard enough time matching up with lenders that will meet their needs.
For many, the concerns for CIT carry far beyond payment terms. Rather, as the controlling factor for the industry, many are concerned over CIT’s power, pushing a way many smaller manufacturers, simply because they can. Other fears include the risks that come with consolidation, and the less heard voice that the designer/manufacturer/retailer can have due to the monopolization of the factoring business.
Despite the debate on weather or not CIT should succumb to its natural fait, rather then being given a second chance at life- it is clear that its impact would be devastating at a time when retail has suffered enough. As the most important shopping season enters, CITs death would be extremely detrimental in rebuilding the economic landscape for not only the US, but for the world. While many are divided on the this potential dilemma, and particularly where this money should come from, it should be known that CIT’s role in facilitating in stimulating consumer spending is important.
Expect more to come on the days a head and its implications for the retail world.
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