Car rental company Hertz filed for bankruptcy this Friday, unable to resist the coronavirus pandemic that has paralyzed the tourism sector, and thereby indebted the 102-year-old company.
The company has been forced to resort to this extreme due to the problems it had been experiencing and which intensified during the pandemic after restrictions on air and land traffic, “which have decimated the vehicle rental market.”
The news comes after the company did not reach an agreement with its main creditors, which gave it until Friday, several US media reported, citing sources close to the matter.
Lenders from the Estero, Florida-based company were unwilling to grant him another extension on his car lease debt payments beyond the deadline, prompting bankruptcy in the Bankruptcy Court in January. Delaware.
Starting in mid-March, the company, whose car rental derivatives also include Dollar and Thrifty, lost all of its revenue when travel was restricted due to the coronavirus. The company made “significant efforts” but was unable to raise money in the capital markets, so it failed to make payments to creditors in April, according to the document. Hertz has also been hit by administrative turmoil, naming its fourth manager in six years on May 18.
“No business is built (to support) for zero revenue,” former CEO Kathryn Marinello said in the company’s first-quarter earnings conference call on May 12. “There is only so much time that companies can hold on to their reserves.”
Hertz has approximately $ 19 billion in debt, comprised of $ 4.3 billion in corporate bonds and loans and $ 14.400 in vehicle-backed debt.
On May 12, the specialized channel CNBC assured that concerns about Hertz’s ability to meet the payment of its obligations had increased, especially after it announced that its creditors gave it until this Friday to launch a plan to refinance the debt and avoid filing for bankruptcy.
The WSJ and New York Times note that Hertz has spent years trying to restructure its business and competing with similar companies like Enterprise Holdingd or Avis, as well as chauffeured car rental companies like Uber or Lyft.
Hertz and its subsidiaries will continue to operate, according to a company statement. The company’s main international regions and Hertz franchised locations are not included in bankruptcy, according to the statement.