Hertz could file for bankruptcy ‘as soon as this weekend'

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

Hertz Global Holdings Inc., the US-based vehicle rental company has filed for bankruptcy. Its worldwide operating regions including Europe, Australia and New Zealand were not included in the U.S. proceedings. 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.

Before the pandemic the company had amassed billions of dollars in debt, with the rise of ride-hailing apps leading to a drop in demand for vehicle rentals.

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

The car-rental business has been decimated as the pandemic has ground travel to a halt, forcing Hertz's CEO to resign as the company missed lease payments and laid off 10,000 workers last month.

Hertz has until Friday to either extend a forbearance agreement or make around $400 million of lease payments. Hertz has about $1 billion United States of cash.

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

Former boss Kathryn Marinello said on the company's first-quarter earnings conference call on May 12 that "No business is built for zero revenue". But it is laying off about 20,000 employees, or around half its workforce.

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Hertz's woes are compounded by the complexity of its balance sheet, which includes more than $14bn of securitised debt. These are not subject to repurchase agreements with vehicle manufacturers.

The Chapter 11 filing in DE allows Hertz to keep operating while it devises a plan to pay creditors and turn around the business.

Hertz earlier signalled it could avoid bankruptcy if it received relief from creditors or financial aid that the company and its competitors have sought from the USA government.

The Estero, Florida-based company had been negotiating with lenders for relief as well as with the U.S. Treasury Department about the possibility of a bailout.

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

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

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