Hertz could file for bankruptcy ‘as soon as this weekend'

Ruben Hill
May 23, 2020

With almost US$19 billion of debt and roughly 38,000 employees worldwide as of the end of 2019, Hertz is among the largest companies to be undone by the pandemic.

Hertz filed for bankruptcy protection Friday, unable to withstand the coronavirus pandemic that has crippled global travel and with it, the heavily indebted 102-year-old vehicle rental company's business. The action includes the company's US and Canadian subsidiaries, but doesn't cover Europe, Australia and New Zealand, according to a statement Friday evening.

Under a Chapter 11 restructuring, creditors will have to settle for less than full repayment, but the company is likely to continue operating.

United States airlines have so far avoided similar fates after receiving billions of dollars in government aid, an avenue Hertz has explored without success.

The Estero, Florida-based company, which operates the Hertz, Dollar and Thrifty car-rental brands, had been holding talks with creditors after skipping significant car-lease payments due in April. Forbearance and waiver agreements on the missed payments were set to expire on May 22.

What they're saying: Hertz locations will remain open for now, and the company says it has over $1 billion in cash on hand to support operations.

Hertz has around $US19 billion in debt, which includes roughly $US4.3 billion in corporate bonds and loans as well as $US14.4 billion of debt backed by the company's fleet of vehicles, and lenders had asked the company for upfront payment on some of those obligations but couldn't get it to agree, according to The Journal.

On May 16, the board appointed executive Paul Stone to replace Kathryn Marinello as CEO.

Hertz's bankruptcy protection filing was hardly a surprise. But it might need to raise more, perhaps through added borrowings while the bankruptcy process moves forward, Hertz said.

"The impact of COVID-19 on travel demand was sudden and dramatic, causing an abrupt decline in the Company's revenue and future bookings".

Hertz's business had already been struggling before the pandemic as it tried to fend off competition from other rental agencies as well as ride-hailing businesses like Uber and Lyft.

But the cuts came too late to save Hertz, the nation's No. 2 auto rental company founded in 1918 by Walter L. Jacobs, who started in Chicago with a fleet of a dozen Ford Model Ts.

Other reports by Click Lancashire

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