Leading Car Rental Company Hertz Files for Chapter 11 Bankruptcy
24th May 2020 | Hong Kong
Hertz, one of the world’s leading car rental company, has filed for Chapter 11 bankruptcy in the United States on the 22nd May 2020, Friday.
“ Hertz files for chapter 11 bankruptcy “
In the official press release, “it cited the impact of COVID-19 on travel demand was sudden and dramatic, causing an abrupt decline in the Company’s revenue and future bookings. However, uncertainty remains as to when revenue will return and when the used-car market will fully re-open for sales.”
Filing for Chapter 11 Bankruptcy in United States
The financial reorganisation, via filing for Chapter 11 bankruptcy, will provide a more robust financial structure that best positions the Company for the future as it navigates what could be a prolonged travel and overall global economic recovery.
Not included in the U.S. Chapter 11 proceedings are the international operating regions including Europe, Australia and New Zealand and Hertz’s franchised locations, which are not owned by the Company. Other Hertz global businesses including Hertz, Dollar, Thrifty, Firefly, Hertz Car Sales, and Donlen subsidiaries will continue to operate as usual.
Not included in the U.S. Chapter 11 proceedings:
- International Regions: Europe, Australia and New Zealand
- Franchised Operations
Hertz announced it has more than $1 billion in cash to support ongoing operations (as of 22nd May 2020, Friday).
History of Hertz
Hertz was founded in 1918 by Walter Jacobs at the age of 22. He started the car rental company with 12 Ford Model-Ts and sold the company to John D. Hertz in 1923. Walter Jacobs stayed as a prominent figure in Hertz until his retirement in 1960. By 2013, Hertz has a portfolio of brands including Hertz, Dollar, Thrifty and Firefly at approximately 10,300 locations worldwide.
In 2019, Hertz Global reported a total revenue of $9.8 billion and a net loss of $58 million. Listed on NYSE, It has a market capitalization of $404 million (22/5/20).
Some of the largest U.S. companies that have filed for Chapter 11 in history includes General Motors (2009), Chrysler (2009), Lehman Brothers (2008), Washington Mutual (2008), Worldcom (2002), Enron (2001).
Chapter 11 Bankruptcy
A case filed under chapter 11 of the United States Bankruptcy Code is frequently referred to as a “reorganization” bankruptcy.
This chapter of the Bankruptcy Code generally provides for reorganization, usually involving a corporation or partnership. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in chapter 11.
Source: Official Press Release
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The Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc., operates the Hertz, Dollar and Thrifty vehicle rental brands throughout North America, Europe, the Caribbean, Latin America, Africa, the Middle East, Asia, Australia and New Zealand.
The Hertz Corporation is one of the largest worldwide vehicle rental companies, and the Hertz brand is one of the most recognized globally. Product and service initiatives such as Hertz Gold Plus Rewards, Ultimate Choice, Carfirmations, Mobile Wi-Fi and unique vehicles offered through its specialty collections set Hertz apart from the competition. Additionally, The Hertz Corporation owns the vehicle leasing and fleet management leader Donlen Corporation, operates the Firefly vehicle rental brand and Hertz 24/7 car sharing business in international markets and sells vehicles through Hertz Car Sales.