Hertz Global Holdings has filed for US Chapter 11 bankruptcy protection due to the COVID-19 pandemic which has crippled global travel, causing what the company called an “abrupt decline in revenue”.
After many US states began to declare stay at home orders in March, car rentals dried up and Hertz reduced spending, implemented furloughs and laid off 20,000 employees. The company missed a payment on its debt in April, and while it managed to reach a short-term deal with its creditors, it couldn’t secure a long-term agreement.
The company has accumulated US$18.7 billion of debt as of March and has around US$1 billion in cash on hand which it says it will use to support its ongoing operations while it proceeds with the bankruptcy process. The company will continue to honour reservations, promotional offers, vouchers and rewards points programmes.
“Today’s action will protect the value of our business, allow us to continue our operations and serve our customers, and provide the time to put in place a new, stronger financial foundation to move successfully through this pandemic and to better position us for the future,” said Paul Stone, CEO of Hertz. “Our loyal customers have made us one of the world’s most iconic brands, and we look forward to serving them now and on their future journeys.”
Hertz is another in a line of companies feeling the financial pain of the crisis. Retailers J.C. Penney, J. Crew and Neiman Marcus have all filed for bankruptcy protection this month, while the home decor chain Pier 1 Imports announced it will be closing permanently, with final closing sales beginning now.