Saturday, 30 May, 2020

Hertz files for bankruptcy: Rental vehicle firm company becomes coronavirus victim

New vehicle sales plummeted a whopping 98.4% for A New vehicle sales plummeted a whopping 98.4% for April 2020 due to the lockdown
Ginger Lawrence | 24 May, 2020, 01:56

Meaning, in layman's terms, the used vehicle market could be flooded if all Hertz's cars are sold to recoup the debt.

The Hertz vehicle rental company has reportedly filed for bankruptcy protection this Friday as continued travel restrictions devastate the business according to court documents.

Hertz filed for bankruptcy Friday night after failing to reach an agreement with lenders, The Wall Street Journal first reported Friday.

Before, Hertz was optimistic in its narrative that time, saying that the situation was fluid and filing for bankruptcy won't be an option.

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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. Company officials added that "there can be no assurances that Hertz will be able to successfully negotiate any further forbearance or waivers extending relief past May 22", meaning it might have to either liquidate vehicles serving as collateral or explore bankruptcy options.

Hertz also has traditional credit lines, loans and bonds with conditions that can trigger defaults based on missing those lease payments or failing to meet other conditions, such as delivering a timely operating budget and reimbursing funds it has borrowed. The company also noted they have more than $1 billion (£821,959,400 / €917,010,700) in cash to support its continuing operations. As a result, "all reservations, promotional offers, vouchers, and customer and loyalty programs" should continue as planned. Its worldwide operating regions including Europe, Australia and New Zealand were not included in the U.S. proceedings.

Any move by Icahn could force him to deal with bondholders like Apollo Global Management Inc., which has been buying Hertz debt at distressed prices after unwinding a short bet it had in the credit-default swaps market. Stone was named CEO on May 18 - days before the bankruptcy filing - after Kathryn Marinello stepped down. He previously served as executive vice president and chief retail operations officer for North America.