The Boston Business Journal reports that CIT Group Inc. filed for bankruptcy protection Sunday after its board of directors approved of a plan to reorganize the giant small business lender.

The plan has also been approved by CIT’s creditors. “The decision to proceed with our plan of reorganization will allow CIT to continue to provide funding to our small business and middle market customers, two sectors that remain vitally important to the U.S. economy,” Chief Executive Jeffrey Peek said in a statement.

The company said its operating subsidiaries, including CIT Bank, weren’t part of the filing and are expected to continue operating.

New York-based CIT (NYSE:CIT), which also operates in Boston, listed assets in the bankruptcy filing of about $71 billion and nearly $65 billion in liabilities.

The size of the bankruptcy trails only those of Lehman Brothers, General Motors and Enron Corp. in U.S. history. CIT hopes to reduce its debt by $10 billion through the reorganization, which will shift ownership to its bondholders and creditors.

The bankruptcy of CIT is likely to hand the Treasury Department its biggest loss to date under the Troubled Asset Relief Program. It invested $2.3 billion in CIT last December.

CIT was caught in a squeeze between loans gone bad as the economy worsened in the past year and being cut off from the unsecured debt market, which it relied on for about 75 percent of its funding. More stable bank deposits made up less than 5 percent of its funds.

Boston Business Journal