Car Rental Company Hertz Preparing for Bankruptcy Filing

As the rapid spread of the coronavirus resulted in economic lockdowns and stay-at-home orders, many companies have been struggling to remain afloat – especially the ones concentrated in the travel industry. According to a recent Wall Street Journal report, the car rental provider Hertz Global (NYSE: HTZ) has been so negatively impacted by coronavirus restrictions, that the company has begun preparations for a potential bankruptcy filing.

The pandemic has hit Hertz so hard that the company was forced to lay off in excess of 10,000 of its employees earlier this month. However, the rental company’s troubles do not stop there. Hertz has also defaulted on its mandatory operating lease payments, which go towards the company’s fleet of rental cars. Although the company is not renting vehicles to consumers due to lack of demand, it is still responsible to make monthly lease payments regardless.

As of current, Hertz’s financial situation is not looking too great. The company is $17 billion in debt, which is comprised of $13.4 billion worth of vehicle-backed notes, and $3.7 billion worth of corporate bonds and loans.

The company has been given a grace period which is scheduled to end on May 4. Now, Hertz is in the midst of negotiations with its senior lenders, hoping to be granted a temporary reduction in payments. If a forbearance agreement is not reached however, then the car rental company will most likely have no choice but to file for bankruptcy and likely auction off its fleet of rental vehicles.

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Information for this briefing was found via Wall Street Journal, Business Insider, and Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.