Hertz Files for US Bankruptcy Protection as Car Rentals Evaporate Amid CCP Virus Pandemic
Hertz Files for US Bankruptcy Protection as Car Rentals Evaporate Amid CCP Virus Pandemic

By Reuters

NEW YORK—The more than a century old car rental firm Hertz Global Holdings Inc filed for bankruptcy protection on Friday after its business was decimated during the CCP virus pandemic and talks with creditors failed to result in much-needed relief.

Hertz’s board earlier in the day approved the company seeking Chapter 11 protection in a U.S. bankruptcy court in Delaware, according to court records. Its international operating regions including Europe, Australia and New Zealand were not included in the U.S. proceedings, the company said.

The firm, whose largest shareholder is billionaire investor Carl Icahn with a nearly 39 percent ownership stake, is reeling from orders restricting travel and requiring citizens to remain home due to the CCP (Chinese Communist Party) virus, also known as the novel coronavirus. A large portion of Hertz’s revenue comes from car rentals at airports, which have all but evaporated as potential customers eschew plane travel.

With nearly $19 billion of debt and roughly 38,000 employees worldwide as of the end of 2019, Hertz is among the largest companies to be undone by the CCP virus 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 firms.

U.S. airlines have so far avoided similar fates after receiving billions of dollars in government aid, an avenue Hertz has explored without success.

The Estero, Florida-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. Forbearance and waiver agreements on the missed payments were set to expire on May 22. Hertz has about $1 billion of cash.

The size of Hertz’s lease obligations have increased as the value of vehicles declined because of the pandemic. In an attempt to appease creditors holding asset-backed securities that finance its fleet of more than 500,000 vehicles, Hertz has proposed selling more than 30,000 cars a month through the end of the year in an effort to raise around $5 billion, a person familiar with the matter said.

A Hertz car rental agency stands in Manhattan, New York on June 30, 2016. (Spencer Platt/Getty Images)

On May 16, the board appointed executive Paul Stone to replace Kathryn Marinello as CEO. Hertz earlier laid off about 10,000 employees and said there was substantial doubt about its ability to continue as a going concern.

Hertz’s woes are compounded by the complexity of its balance sheet, which includes more than $14 billion of securitized debt. 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.

Hertz also has traditional credit lines, loans and bonds with conditions that can trigger defaults based on missing those lease payments or failing to meet other conditions, such as delivering a timely operating budget and reimbursing funds it has borrowed.

Hertz earlier signaled it could avoid bankruptcy if it received relief from creditors or financial aid the company and its competitors have sought from the U.S. government. The U.S. Treasury has started assisting companies as part of an unprecedented $2.3 trillion relief package passed by Congress and signed into law.

A trade group representing Hertz, the American Car Rental Association, has asked Congress to do more for the industry by expanding CCP virus relief efforts and advancing new legislation targeting tourism-related businesses.

Even before the pandemic, Hertz and its peers were under financial pressure as travelers shifted to ride-hailing services such as Uber.

To combat Uber, Hertz had adopted a turnaround plan, aiming to modernize its smartphone apps and improve management of its fleet of rental cars.

Hertz traces its roots to 1918, when Walter Jacobs, then a pioneer of renting cars, founded a company allowing customers to temporarily drive one of a dozen Ford Motor Co Model Ts, according to the company’s website.

By Mike Spector

Affiliate News Feeds

  • Reuters
  • Washington Examiner
  • The Federalist
  • The Epoch Times
  • The Guardian
  • The Gateway Pundit
  • Judicial Watch

By Tom Ozimek Protesters claiming voter disenfranchisement and a stolen election rallied near the Arizona state Capitol on Friday, demanding that the planned Nov. 28 certification of the 2022 election be halted and a… [...]

By Tom Ozimek Thin crowds of inflation-weary shoppers hunted for Black Friday deals, with foot traffic remaining sparse in many malls across the country as Americans instead flocked online, where… [...]

Custom website and graphic designer Lorie Smith doesn't want to be forced to create websites for same-sex weddings due to her Christian faith, an issue the Supreme Court will debate… [...]

You might be hard-pressed to come by Santa this year — just another long-term effect of the pandemic wreaking havoc on employee shortages. The average working Santa is of a… [...]

Advent draws us away from the spirit-stifling societal frenzy and into the quiet, where we can commune with God.  [...]

YouTube deleted the video comparing Trump's statements questioning the 2020 election results to Democrats questioning the 2016 contest. [...]

PHOENIX, Ariz.—They came. They sat. They protested, and they left. Few in attendance expected the disappointingly low turnout at a well publicized “sit-in” demonstration to demand a new midterm election… [...]

California Gov. Gavin Newsom talked about his plan for 2024 recently during an interview with Politico, as speculation circulated that he will run. Newsom, 55, reportedly told the White House… [...]

First such accord after leaving EU was predicted to bring £15bn boost but UK now lags rivalsThe first major free trade agreement signed by Britain after Brexit has been branded… [...]

Findings come amid mounting evidence that the poorest people in the UK are paying a ‘poverty premium’ for basic servicesMillions of households will be paying almost a third of their… [...]

The new Republican controlled House is going to engage in a number of investigations. Rep. Steve Scalise, who is going to be the new majority leader recently detailed the topics… [...]

Neoconservative war hawk John Bolton is trashing former President Donald Trump and championing Florida Governor Ron DeSantis for the White House in 2024. Trump has already announced his candidacy, while… [...]

Happy Thanksgiving! Happy Thanksgiving! Each year I like to remind our supporters to recall what life was like for the Pilgrims who arrived on these shores in December of 1620.… [...]

From Washington Examiner: San Francisco’s district attorney has refused to release public documents and video of Paul Pelosi’s attack to conservative watchdog Judicial Watch, instead directing the group to a… [...]

NH Politician

NH POLITICIAN is owned and operated by USNN World News Corporation, a New Hampshire based media company specializing in the collection, publication and distribution of public opinion information, local,...