May 23, 2020 9:54 AM | With information from EFE
15 minutes. The car rental company Hertz filed for bankruptcy in the United States (Friday) after failing to reach an agreement with its main creditors.
“The impact of COVID-19 on travel demand was sudden and dramatic, causing an abrupt decrease in the company’s income and future reserves“reported Hertz, which also operates subsidiaries Dollar and Thrifty.
The bankruptcy affects the operations of Hertz and its subsidiaries in the US and Canada, but not in Europe or Oceania, nor those that operate as franchises.
The company also indicated that it will remain open to the public while it restructures.
Hertz, founded in 1918, thus became the latest and highest profile victim of the pandemic. The respiratory illness also forced bankruptcy at retailers JCPenney, Neiman Marcus, and J.Crew, as well as oil companies Whiting Petroleum and Diamond Offshore Drilling.
The company was forced to resort to this extreme due to the problems it had been experiencing and which intensified during the pandemic. Air and ground traffic restrictions potentially haunted the car rental market.
“Bankruptcy would make Hertz one of the highest-profile corporations in the US to see itself unable to pay its creditors“according to The Wall Street Journal.
The lenders requested compensation from the company in exchange for a new extension of the terms. Despite the attempts, the parties did not reach an agreement.
Hertz has approximately $ 19 billion in debt, comprised of $ 4.3 billion in corporate bonds and loans and $ 14.4 billion 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 increased, especially after it announced that its creditors gave it until this Friday to launch a debt refinancing plan. and avoid filing for bankruptcy.
The Estero-based company announced on March 11 that it was in contact with its shareholders and directors to develop a financing strategy.
The WSJ and New York Times note that Hertz has spent years trying to restructure his business and competing with similar companies like Enterprise Holdings or Avis, as well as chauffeured car rental companies like Uber or Lyft.