Hertz suspends sale of 'worthless' stock amid SEC scrutiny

Hertz allowed to sell $1 bn in shares despite bankruptcy

The stock, whose trading had been halted earlier in the day, ended the regular trading session up 5 cents at $2, while ilts bonds tumbled.

The shares were suspended on Wednesday a few hours after the United States Securities and Exchange Commission (SEC) voiced doubts about its $ 500 million share sale plan.

Funding a company's bankruptcy has always been a safe and lucrative business for Wall Street banks and asset managers, earning them high fees and interest rates with minimal risk.

Because to amateur investors with nothing else to do, bankruptcy = opportunity.

Although retail investors have soundly picked up on the risks associated with a share dilution- and as a result went on a Hertz panic-buying frenzy, they are still ignoring the very basic fundamentals- like the fact that the bankrupt stock is still worthless. The company's stock fell 10% to $ 1.8 a share before the sale was canceled. Hertz had said stockholders wouldn't get anything from its bankruptcy plan unless those with more senior claims, including bondholders, are paid in full.

Analysts have remarked how unusual it was for a company ensnared in bankruptcy proceedings to propose such a large sale of common shares - holders of which are usually last in line when the bankruptcy court hands out company assets.

United Kingdom government abandons NHS contact tracing app
Fried argues that freedom from Apple's restrictive payment practices equates to a better customer experience. They have been trying to launch the Facebook Gaming app on the App Store with no success since February.

A series of strategic missteps, competition from ride-hailing giants including Uber Technologies Inc. and Lyft Inc., and a revolving door of chief executives left Hertz a step behind its competitors for the better part of a decade.

How to know whether a stock can wipe you out?

"With the severity of the COVID-19 impact on our business, and the uncertainty of when travel and the economy will rebound, we need to take further steps to weather a potentially prolonged recovery", Hertz President and CEO Paul Stone said in a news release following the announcement.

Hertz now needs cash, among other things to pay the army of lawyers and bankers advising the company on its bankruptcy case.

Still, why would anyone buy stock in a bankrupt firm? "Please don't make the expensive mistake of thinking there aren't no more Hertzes out there".

-Matt Wirz contributed to this article.

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