Goldman will Cash in if CIT goes Chapter 11

Goldman Sachs Group Inc. (NYSE:GS) could rake in $1 billion if CIT Group Inc. (NYSE:CIT) goes belly up, care to place a wager?

Goldman Sachs Group Inc. stands to make $1 billion if CIT Group Inc. files for Chapter 11 bankruptcy protection, the Financial Times reported, citing people familiar with the matter.

Under the terms of a $3 billion rescue package made to the U.S. commercial property lender by Goldman in June 2008, the bank has the right to demand the $1 billion, although Goldman is expected to agree to delay payment of all or part of the amount, the newspaper said.

According to the FT, CIT "would be required to pay a make-whole amount" that totals $1 billion under that agreement.

Goldman is likely to agree to allow CIT to delay payment on some of the amount, according to the report. Beyond the $1 billion payment from its rescue package, Goldman would also receive payment from credit insurance it holds if CIT were to go bankrupt.

SOURCE: http://www.bloomberg.com/apps/news?pid=20601103&sid=ahFzCSZaqbTs