“CIT Group, a major lender to small and mid-size businesses, filed for bankruptcy protection Sunday afternoon, a process that almost certainly will wipe out the federal government’s $2.3 billion investment in the company.

CIT is the first firm bailed out by the government to subsequently fail.

The 101-year-old firm said it hoped to significantly reduce its debt in what is known as a ‘prepackaged’ plan for reorganization, which would allow it to emerge from Chapter 11 bankruptcy protection by the end of the year. It is one of the biggest bankruptcy filings in U.S. history and could have broad ripple effects. The firm provides loans to about 1 million companies, including many already struggling in the economic downturn. “

(Source: CIT files for Chapter 11 bankruptcy protection – washingtonpost.com)