Hertz Files For Bankruptcy Due To Coronavirus Crisis

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

Mounting debt is also said to have lead to the collapse of Hertz's rental vehicle business.

Chapter 11 is a mechanism that allows a company that is no longer able to repay its debt to restructure itself without creditors. Its global operating regions including Europe, Australia and New Zealand were not included in the USA proceedings. The Chapter 11 proceedings only involve the United States and Canadian subsidiaries. The petition listed IBM Corp. and Lyft Inc.as its biggest creditors, while assets and debts are at $25.8 billion and $24.4 billion, respectively.

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 Chapter 11 filing in DE allows Hertz to keep operating while it devises a plan to pay creditors and turn around the business. No Hertz locations in the USA are expected to close, including subsidiaries such as Dollar, Thrifty and Hertz Car Sales.

Hertz's bankruptcy protection filing has not come as a surprise.

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On May 18, Hertz named operations chief Paul Stone as chief executive and announced that Ms Marinello would step down as chief executive and from the company's board. 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 fall. The U.S. Treasury has started assisting companies as part of an unprecedented $2.3 trillion USA relief package passed by Congress and signed into law.

There have been claims the bankruptcy could affect the price of cars.

The company usually soldier on through demand slump by selling a part of its fleet but with the volatile prices in the used vehicle market, that strategy isn't helping at all.

White & Case LLP is the company's legal adviser, Moelis & Co.is the investment banker, and FTI Consulting Inc.is providing financial advice. It cut 12,000 jobs worldwide and put 4,000 workers on furlough.

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