The Chapter 11 filing allows Hertz to keep operating while it formulates a recovery plan. The company also noted they have more than $1 billion (£821,959,400 / €917,010,700) in cash to support its continuing operations. But while it managed to negotiate a short-term reprieve from creditors, it wasn't able to work out longer-term agreements. In March 2020, however, Hertz began laying off workers in an attempt to save money after missing lease payments on its rental vehicle fleet.
Hertz's bankruptcy protection filing was hardly a surprise.
Analysts have warned of ramifications for the broader auto industry from a Hertz bankruptcy. The forbearances, usually an agreement between a lender and borrower to delay a foreclosure, "provide Hertz with additional time through May 22 to engage in discussions with its key stakeholders with the goal to develop a financing strategy and structure that better reflects the economic impact of the COVID-19 global pandemic and Hertz' ongoing operating and financing requirements", the firm said in the documents. But it might need to raise more, perhaps through added borrowings while the bankruptcy process moves forward. No Hertz locations in the US are expected to close, including subsidiaries such as Dollar, Thrifty and Hertz Car Sales. Jacobs sold the company, initially called Rent-A-Car Inc., to John D. Hertz in 1923. "Hopefully, the restructuring expenses will not bury the company in the process". 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 disclosed on April 29 that it had missed substantial lease payments related to its rental cars. 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 falls.
The more than a century old vehicle rental firm, whose largest shareholder is billionaire investor Carl Icahn, is reeling from government orders restricting travel and requiring citizens to remain home.
Icahn's holding company is Hertz's largest shareholder, with a 38.9% stake in the company, according to FactSet.