Virus shutdowns push Hertz into bankruptcy in USA and Canada

Car rental firm Hertz Global Holdings Inc filed for bankruptcy protection after its business was decimated during the coronavirus pandemic and talks with creditors failed to result in much-needed relief

Virus shutdowns push Hertz into bankruptcy in USA and Canada

Hertz has has not commented on how this will affect British and Irish operations.

The court petition listed about $25.8 billion in assets and $24.4 billion of debts.

The company, which rents cars at airports across the country, is seeking so-called Chapter 11 protection in the wake of the coronavirus pandemic. The company was unable to secure a long-term agreement.

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"No business is built for zero revenue", former boss Kathryn Marinello said on the company's first quarter earnings conference call on May 12.

Analysts have warned of ramifications for the broader auto industry from a Hertz bankruptcy. To combat that threat, Hertz had adopted a turnaround plan, aiming to modernise its smartphone apps and improve management of its fleet of rental cars.

Hertz has halted about 90% of its new vehicle orders for 2021, a move that could pinch automakers as the vehicle rental segment typically brings about 10% of auto sales for the year.

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The filing excludes Hertz's global operating regions in Europe, Australia and New Zealand, as well as its more than 10,000 franchised locations. "Hopefully, the restructuring expenses will not bury the company in the process".

She added: "There's only so long that companies" reserves will carry them'.

The Estero, Fla. -based company, which operates Hertz, Dollar and Thrifty car-rentals, had been in talks with creditors after skipping significant car-lease payments due in April. The proceeds from those securities finance purchases of vehicles that are then leased to Hertz in exchange for monthly payments that have risen as the value of cars falls. Hertz typically responds to falling demand by selling cars from its fleet, so it has been hit especially hard by a drop in prices at used vehicle auctions.

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White & Case LLP is the company's legal adviser, Moelis & Co.is the investment banker, and FTI Consulting Inc.is providing financial advice. Carl Icahn holds a 38.89% equity stake, Hertz said. Business and leisure travel during these times are both prohibited or limited, to say the least, in order to help curb the spread of the disease.

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