CIT Group Inc. (“CIT”) announced late Thursday that its Board of Directors and a Steering Committee of CIT bondholders approved a restructuring plan, which the small business and middle market financer believes will allow it to emerge as a “well-funded bank holding company with a strong capital position and market-leading franchises.” CIT has been developing a restructuring plan for such purpose over the last several months.

The plan contemplates a series of exchanges for unsecured notes issued by CIT and a subsidiary, CIT Group Funding Company of Delaware LLC, for a “pro rata portion of each of five series of newly-issued secured notes, with maturities ranging from four to eight years, and/or shares of newly issued voting preferred stock.” The conditions to the exchange offers mean that the exchange offers cannot be consummated if the face amount of CIT’s “total debt is not reduced by at least $5.7 billion in aggregate, with specific debt reduction targets for the periods from 2009 to 2012.”

If the requisite level of noteholders do not participate in the exchange offer, however, CIT will file a bankruptcy petition under Chapter 11 for a voluntary reorganization. In order to expedite an in-court proceeding, should it become necessary, the company is also soliciting debtholder acceptances of a prepackaged reorganization plan.

CIT has assured its clients that it has enough liquidity to serve them through either restructuring process. In addition, CIT Bank and CIT’s operating entities would not be part of the bankruptcy. Holders of approximately $10 billion of outstanding unsecured debt have expressed their intention already to participate in the exchange or vote in favor of the prepackaged plan. The exchange offer is set to expire before midnight on October 29, 2009.