Hertz files for bankruptcy in the US as the coronavirus crushes the car-rental industry
- Hertz filed for bankruptcy Friday night after failing to reach an agreement with lenders, The Wall Street Journal first reported Friday.
- Hertz has around $19 billion in debt, including $4.3 billion in corporate bonds and loans as well as $14.4 billion of debt backed by their vehicles, according to The Journal.
- 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's stock plunged in after-hours trading following the news.
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Car-rental giant Hertz filed for bankruptcy Friday night after it was unable to reach an agreement with its biggest lenders, The Wall Street Journal first reported.
Hertz filed for Chapter 11 protections in the US Bankruptcy Court in Wilmington, Delaware, making it one of the largest corporate casualties of the coronavirus pandemic's widespread economic fallout as travel restrictions decimate the rental car industry.
The company did not immediately respond to a request for comment.
Hertz has around $19 billion (R340 billion) in debt, which includes roughly $4.3 billion in corporate bonds and loans as well as $14.4 billion of debt backed by the company's fleet of vehicles, and lenders had asked the company for upfront payment on some of those obligations but couldn't get it to agree, according to The Journal.
Hertz's business had already been struggling even before the pandemic as it tried to fend off competition from other rental agencies as well as ride-hailing businesses like Uber.
In April, as travel ground to a halt, it laid off 10,000 workers - roughly 26% of its total workforce - and even put at least 20 identical yellow Corvette Z06s up for sale online at a steep discount as it tried to preserve cash.
CEO Kathryn Marinello resigned last Saturday, and the company's board of directors named Paul Stone, who previously served as the company's executive vice president and chief retail operations officer for North America, to step in for Marinello.
Hertz, whose parent company, Hertz Global Holdings Inc., also owns rental brands Dollar and Thrifty, had said in a regulatory filing in April that it was considering seeking bankruptcy protections after it "did not make certain payments" on its operating lease. Hertz said it "could be materially and negatively impacted" if discussions with lenders to reduce those payments weren't fruitful by the first week of May.
Hertz's stock dropped by as much as 50% in after-hours trading following the The Wall Street Journal's initial report that the company would file for bankruptcy on Friday night.
Hertz in South Africa is an international franchisee of the global Hertz Corporation, and it is not yet clear how it will be affected. Hertz has more than 30 outlets in South Africa, and its subsidiary Thrifty has around 16 in the country.
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