CIT Says CEO Peek to Retire at Year End

Amid reports that a prepackaged bankruptcy is likely, CIT Group (CIT) CEO Jeffrey Peek announced plans Tuesday morning to resign at the end of the year.

It’s not clear who will replace Peek but CIT said its board of directors is forming a search committee to oversee the recruitment process and ensure a smooth leadership transition. CIT said Peek will “work closely with board” on the search process.

The change at the top comes hours after Reuters reported CIT’s debt exchange offer aimed at shoring up its balance sheet has seen little interest from bondholders, increasing the odds the lender will try to file for a prepackaged bankruptcy.

CIT has been teetering on the edge of bankruptcy for months amid a heavy debt load and continued losses. A CIT failure would mark one of the largest bankruptcies in U.S. history and could hurt the broader economy as the century-old lender serves as a key source of financing for many small businesses.

“Now is the appropriate time to focus on a transition of leadership, and I look forward to working closely with our board during that process,” Peek wrote in a statement.

CIT’s shares took a hit on the news, tumbling to 84 cents after closing at $1.04 on Monday. The lender’s stock is down nearly 80% year-to-date.

“We are grateful for Jeff’s many contributions to the company. He has exhibited remarkable commitment and resolve while also providing invaluable leadership during a challenging period,” John Ryan, lead director at CIT, said in a statement.

The news comes as the National Federation of Independent Business Index reports that 10% of small businesses reported problems obtaining desired financing in September, up three percentage points from the month before.