Hertz filed for bankruptcy protection Friday, unable to withstand the coronavirus pandemic that has crippled global travel and with it, the heavily indebted 102-year-old car rental company's business.
The
Hertz and its subsidiaries will continue to operate, according to a release from the company. Hertz's principal international operating regions and franchised locations are not included in the filing, the statement said.
By the end of March,
Starting in mid-March, the company — whose car-rental bands also include Dollar and Thrifty — lost all revenue when travel shut down due to the coronavirus. The company made “significant efforts” but couldn’t raise money on the capital markets, so it started missing payments to creditors in April, the filing said. Hertz has also been plagued by management upheaval, naming its fourth CEO in six years on
“No business is built for zero revenue,” former CEO
In late March, Hertz shed 12,000 workers and put another 4,000 on furlough, cut vehicle acquisitions by 90% and stopped all nonessential spending. The company said the moves would save
But the cuts came too late to save Hertz, the nation’s No. 2 auto rental company founded in 1918 by
In a note to investors in late April, Jefferies analyst
On
Icahn’s holding company is Hertz’s largest shareholder, with a 38.9% stake in the company, according to FactSet.
Hertz’s bankruptcy protection filing was hardly a surprise. In its first-quarter report filed earlier in May with securities regulators, the company said it may not be able to repay or refinance debt and may not have enough cash to keep operating.
“Management has concluded there is substantial doubt regarding the company’s ability to continue as a going concern within one year from the issuance date of this quarterly report,” it said.
Under a Chapter 11 restructuring, creditors will have to settle for less than full repayment. Its biggest creditors are banks, but the filing lists
Hertz isn't the first struggling company to be pushed into bankruptcy by the coronavirus crisis. The company joins department store chain
Krisher reported from
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