CIT Filed For Bankruptcy: What Happens To Your Favorite Fashions?

A look from Lim's spring 2010 collection, via Style.com.

3.1 Phillip Lim. Doo.Ri. Michael Kors. These are beloved brands that happen to be clients of CIT, the commercial lender that filed for Chapter 11 bankruptcy protection on Sunday.

A pared down synopsis for fashion-lovers who aren’t financed-obsessed: CIT provides bridge loans to small and mid-sized companies. In the fashion industry, that means that designers, manufacturers and retailers borrow from CIT so that they can produce clothes before selling anything. Basically, CIT would say, “Sure you can have this money, as long as you pay me back–plus interest–after you sell that rack of button downs.” Unfortunately, companies haven’t been able to sell so many button downs, which means CIT is broke.

Right now, CIT doesn’t have the cash to loan your favorite designers. But does that mean stores are going to be empty come spring?

Probably not.

First off, healthy, profitable brands–yes, there are some–will be able to get loans from other companies. And some may even have enough cash to fund manufacturing themselves. And while CIT filed for bankruptcy protection, that doesn’t mean that it’s going out of business. The “bankruptcy plan” that CIT has put together says that the company will be able to remain in tact, and will be able to start loaning money again. However, until then, there’s no denying that it’s going to be a tough road for many.