by Calculated Risk on 10/07/2009 09:50:00 PM

From Dow Jones: Pimco Has Quit CIT Bondholder Steering Committee

The future of CIT Group Inc. (CIT) grew murkier Wednesday after the disclosure that bond fund giant Pacific Investment Management Co. had quit a steering committee that's trying to prevent the commercial lender from collapse. ... Boston-based Baupost Group LLC [had quit earlier].
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The company has an estimated $75 billion in assets, and provides critical short-term financing to about one million small companies.
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Investors have until 11:59 p.m. Eastern time on Oct. 29 to tender their bonds under the restructuring plan.

Small firms have already been hit hard in this recession, accounting for about 45% of the job losses (see Melinda Pitts at Macroblog: Prospects for a small business-fueled employment recovery):

In a speech [Monday], William Dudley, the president of the Federal Reserve Bank of New York, identified financial constraints for small businesses as a restraint on the pace of economic recovery.
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Looking ahead, it's not clear whether small businesses will continue to play their traditional role in hiring staff and helping to fuel an employment recovery. However, if the above-mentioned financial constraints are a major contributor to the disproportionately large employment contractions for very small firms, then the post-recession employment boost these firms typically provide may be less robust than in previous recoveries.

As the article mentioned, CIT provides financing for about one million small business. If CIT files bankruptcy, the company will continue to operate, but they may not write any new business. Their competitors will pick up the best of the business, but many small firms will struggle to find new financing.

The clock is ticking.