Hertz, a car rental multinational with over a century of existence, bankruptcy filing on Friday, 22, after his business disappeared during the new coronavirus pandemic and conversations with creditors did not provide the necessary relief.
The company said, in a lawsuit in the United States, that it voluntarily entered into the reorganization of the Bankruptcy Law (chapter 11 of the American code). Its international operating regions, including Europe, Australia and New Zealand, were not included in the US procedures.
The multinational, whose largest shareholder is the billionaire investor Carl Icahn, suffers from government confinement orders – which restrict travel and require citizens to remain at home. Much of Hertz’s revenue comes from car rentals at airports, which have virtually disappeared as customers avoid flying.
With nearly $ 19 billion in debt and approximately 38,000 employees worldwide by the end of 2019, Hertz is among the largest companies to be undone by the pandemic. The public health crisis has also caused a cascade of bankruptcies or Chapter 11 preparations among companies dependent on consumer demand, including retailers, restaurants and oil and gas companies.
The size of Hertz’s rental obligations increased as the value of vehicles decreased due to the pandemic. In an attempt to appease creditors who have asset-backed securities that finance its fleet of more than 500,000 vehicles, Hertz has proposed selling more than 30,000 cars a month by the end of the year, in an effort to raise about $ 5 billion, according to a source.
On May 16, the board appointed the executive Paul Stone to replace Kathryn Marinello as CEO. Hertz previously laid off about 10,000 employees and said there was substantial doubt about its ability to remain a constant concern.
The multinational’s problems are compounded by the complexity of its balance sheet, which includes more than $ 14 billion in securitized debt. The proceeds from these bonds finance the purchase of vehicles that are rented in exchange for monthly payments that have increased as the value of the cars decreases.
Hertz also has traditional credit lines, loans and bonds with conditions that can trigger defaults based on the lack of these lease payments or the non-fulfillment of other conditions, such as delivering a timely operating budget and repaying the borrowed funds.
The company previously signaled that it could avoid bankruptcy if it received relief from creditors or financial aid that the company and its competitors requested from the U.S. government. The Treasury began helping companies as part of an unprecedented $ 2.3 trillion relief package, approved by Congress and sanctioned by President Donald Trump. / .
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