The US car rental firm Hertz Global Holdings has filed for Chapter 11 bankruptcy protection yesterday after it failed to get more financial help from its creditors after the current coronavirus COVID-19 pandemic has decimated its business.
The board approved the measure earlier on Friday as a last ditched attempt to rescue the company after the US Administrations travel restrictions and lockdowns has meant its hire car business, with the majority of locations at airports has dramatically reduced to unprecedented low levels. The car hire giant is one of the largest companies in the U.S. to become bankrupt due to the current pandemic.
The firm has nearly $19 billion of debt, it had hoped to take some of the U.S. governments $2.3 trillion relief package passed by Congress and signed into law that many airlines have taken advantage of to survive the downtown, however it had been unsuccessful.
A trade group representing Hertz, the American Car Rental Association, had asked Congress to do more for the industry by expanding coronavirus relief efforts and advancing new legislation targeting tourism-related businesses. 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.
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.
The firms international operations including Europe, Australia and New Zealand were not included in the U.S. proceedings, the company said.
Additional reporting by Mike Spector in New York
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