Car-rental company Hertz files for bankruptcy

New vehicle sales plummeted a whopping 98.4% for A

The company has confirmed that it will not affect business operations in any of the other 12,400 locations where it has set up shop, including India with service provider, Orix.

A Hertz vehicle rental logo is seen in Landover Hills, Maryland, December 31, 2014.

Hertz has listed 567,600 vehicles in its US fleet on its employ previous year, all or majority of which are either bought or leased - far from the usual buyback agreement with automakers.

"No business is built for zero revenue", former boss Kathryn Marinello said on the company's first quarter earnings conference call on May 12.

The Florida-based company, which operates Hertz, Dollar and Thrifty vehicle rentals, held talks with creditors after skipping significant auto lease payments due in April.

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The Chapter 11 filing in DE allows Hertz to keep operating while it devises a plan to pay creditors and turn around the business. Top shareholder Carl Icahn could still swoop in with a last-minute rescue to protect a $1.6 billion investment, now worth about $170 million as of Thursday's close, one of the people said. In fact, the long-running car-rental company in the US has reportedly been in a critical financial condition earlier this month, citing a 73 percent drop in shares over the past three months.

"Hertz may have little choice but to scale down its operations and sell assets to pay down its significant secured debt", Joseph Acosta, a partner in the bankruptcy practice at the law firm Dorsey & Whitney, said in an email.

Before the pandemic, Hertz reported total revenues of $9.8 billion for 2019, which represented an increase of 3 percent over 2018.

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

Company officials added then that "there can be no assurances that Hertz will be able to successfully negotiate any further forbearance or waivers extending relief past May 22", meaning it might have to either liquidate vehicles serving as collateral or explore bankruptcy options. The company joins department store chain J.C. Penney, as well as Neiman Marcus, J.Crew and Stage Stores.

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