Hertz auto rental has filed for bankruptcy protection amid COVID-19

Daniel Fowler
May 24, 2020

At this time, all of Hertz's global businesses (including its Hertz, Dollar, Thrifty, Firefly, Hertz Car Sales, and Donlen subsidiaries) are open and serving customers. The Estero, Florida-based company named him its fifth CEO since 2014 just four days before the bankruptcy filing.

The 102-year-old firm was £15.3bn ($18.7bn) in debt by the end of March and started missing debt payments in April, court documents reveal. In fact, the long-running car-rental company in the US has reportedly been in a critical financial condition earlier this month, citing a 73 percent drop in shares over the past three months. The company listed about $25.8 billion in assets and $24.4 billion of debts.

Hertz (HTZ) is reportedly in a deadlock with its creditors as it looks to come to an agreement over lease payments for its vehicle fleet as it attempts to avoid filing for bankruptcy.

The Chapter 11 filing was made in the U.S. Bankruptcy Court for the District of DE and includes its Hertz's U.S. and Canadian subsidiaries. The bankruptcy also doesn't impact its principal worldwide operating regions including Europe, Australia and New Zealand. The company has confirmed that it will not affect business operations in any of the other 12,400 locations where it has set up shop, including India with service provider, Orix. Hertz said their ultimate goal is to provide a "more robust financial structure that best positions the company for the future as it navigates what could be a prolonged travel and overall global economic recovery".

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Traders scrambled to unload positions ahead of the contract's expiration, contributing to the historic drop, experts noted. Brent crude, the global benchmark, was changing hands at $25.61 a barrel for June delivery, up 0.15 per cent.

The more than a century old vehicle rental firm, whose largest shareholder is billionaire investor Carl Icahn, is reeling from government orders restricting travel and requiring citizens to remain home. Experts believe this could tank used-car prices in the USA further, if the sale of these vehicles doesn't happen in a staggered manner over several months.

Hertz, originally known as Rent-a-Car Inc., was founded in Chicago in 1918. Now, the company will be forced out of business in the US.

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