The more than a century old car rental firm Hertz Global Holdings Inc filed for bankruptcy protection on Friday after its business was decimated during the coronavirus pandemic and talks with creditors failed to result in much needed relief.
Hertz's board earlier in the day approved the company seeking Chapter 11 protection in a US bankruptcy court in Delaware, according to court records. Its international operating regions including Europe, Australia and New Zealand were not included in the US proceedings, the company said.
The firm, whose largest shareholder is billionaire investor Carl Icahn with a nearly 39 per cent ownership stake, is reeling from government orders restricting travel and requiring citizens to remain home. A large portion of Hertz's revenue comes from car rentals at airports, which have all but evaporated as potential customers eschew plane travel.
With nearly $US19 billion ($A29 billion) of debt and roughly 38,000 employees worldwide as of the end of 2019, Hertz is among the largest companies to be undone by the pandemic. The public health crisis has also caused a cascade of bankruptcies or Chapter 11 preparations among companies dependent on consumer demand, including retailers, restaurants and oil and gas firms.
US airlines have so far avoided similar fates after receiving billions of dollars in government aid, an avenue Hertz has explored without success.
The Estero, Florida-based company, which operates Hertz, Dollar and Thrifty car-rentals, had been in talks with creditors after skipping significant car-lease payments due in April. Forbearance and waiver agreements on the missed payments were set to expire on May 22. Hertz has about $US1 billion ($A1.5 billion) of cash.
Even before the pandemic, Hertz and its peers were under financial pressure as travellers shifted to ride-hailing services such as Uber.
To combat Uber, Hertz had adopted a turnaround plan, aiming to modernise its smartphone apps and improve management of its fleet of rental cars.
Hertz traces its roots to 1918, when Walter Jacobs, then a pioneer of renting cars, founded a company allowing customers to temporarily drive one of a dozen Ford Motor Co Model Ts, according to the company's website.
Australian Associated Press