Hertz Global Holdings, Incorporated — which includes certain subsidiaries of its operations in the United States and Canada — is poised to emerge from reorganization under Chapter 11 in the United States Bankruptcy Court as soon as June of 2021 if all goes well, as a recent official press release announced that all of the required court filings have been completed and are needed to continue the process, which was initiated at the beginning of March 2021.
Hertz to Emerge From Chapter 11 Bankruptcy as Soon as June 2021
Adversely affected by the current 2019 Novel Coronavirus pandemic, voluntary petitions for reorganization under Chapter 11 in the United States Bankruptcy Court for the District of Delaware were filed by Hertz Global Holdings, Incorporated back in May of 2020 in an effort to create a strengthened and more robust financial capital structure that best positions the rental car company for the future as it navigates its way through what could be a prolonged recovery for both the travel industry and the global economy overall.
Hertz Global Holdings, Incorporated is contemplated to emerge from Chapter 11 as a publicly-traded company, with up to approximately 80 percent of its shares owned by the holders of its unsecured funded debt obligations in the United States.
“Based on events that have occurred since the initial Plan filing, including (1) material modifications and improvements to both sponsorship proposals, (2) the fact that both proposals remain subject to certain contingencies, including final documentation, and (3) input received from holders of over 80% of Hertz’s approximately $2.7 billion of unsecured notes, Hertz has determined to continue the process of negotiating the terms on which its Plan will be sponsored without delaying its goal of exiting Chapter 11 by early to mid-summer”, according to the official press release. “This ongoing iterative and competitive process is reflected in the court filings Hertz made last night. The Company expects to file one or more amendments to the documents filed yesterday to incorporate the terms of a finalized sponsorship proposal once selected.”
Upon its emergence from Chapter 11 under the current terms of two proposals, Hertz Global Holdings, Incorporated would:
- Have approximately $1.3 billion of corporate debt at most
- Be provided with greater than $2 billion of global liquidity
- Obtain a new asset-backed securitization facility which would pay all existing obligations in full which are related to the vehicle fleet of Hertz in the United States, and provide the funding needed to meet the ongoing fleet requirements of Hertz
- Satisfy in full all debt obligations associated with the European business of Hertz, leaving it free of debt.
Some of the 30 subsidiaries of Hertz Global Holdings worldwide which are included in the filing are:
- The Hertz Corporation
- Thrifty Car Rental, Incorporated
- Dollar Rent A Car, Incorporated
- Firefly Rent A Car LLC
- Hertz Car Sales
- Hertz Aircraft, LLC
- Donlen Corporation
About Hertz
Walter L. Jacobs founded Rent-a-Car Incorporated in Chicago in 1918 at the age of 22 with a fleet of a dozen Model T Ford cars to rent to customers.
John Daniel Hertz, Senior — who was born as Schandor Herz in Slovakia in 1879 — founded the Yellow Cab Company in Chicago in 1915. He purchased Rent-a-Car Incorporated from Jacobs in 1923 and renamed the company Hertz Drive-Ur-Self System. By 1925, Hertz was generating annual revenues of approximately $1 million with what became a coast-to-coast rental network before Hertz sold the company to General Motors in 1926.
In the years before John Hertz purchased the rental car company back from General Motors, Hertz offered the first advanced reservations; a new program called Rail-Drive through which Hertz provided a rental vehicle for vacationers right when they stepped off the train; released the first rental car charge card in 1926; opened its first rental car location at Midway Airport in Chicago in 1932; introduced the first one-way rental plan in 1933; and opened its first European location in France in 1950.
In 1972, Hertz introduced the #1 Club — which is now known as Hertz Gold Plus Rewards — that was a computerized data system that allowed club members to use Express Service. The service eventually expanded its benefits, allowing club members to bypass the airport counter and move directly from the airplane to a Hertz rental car in 1989. The 1990s brought the on-board navigation system NeverLost and the first Internet web site for the company.
In 2013, Hertz developed and expanded its portfolio of rental car brands at approximately 10,300 locations across the globe with the combination of Hertz, Dollar, Thrifty and Firefly.
Additional information pertaining to the 100-year history of Hertz is found here.
Summary
At the time that this article was written, the stock price of Hertz — symbol HTZGQ — is $1.27; but it was as low as 40 cents per share. The stock price suffered a precipitous fall from its all-time high of $106.15 on Friday, August 22, 2014 to $7.71 on Friday, June 9, 2017. Current shares of the stock are expected to become worthless once the company emerges from Chapter 11 bankruptcy reorganization.
Hertz is far from being a perfect company — especially with its stealth perceived significant devaluation of its Hertz Gold Rewards frequent renter loyalty program last year and its draconian points usage cancellation policy…
…but I am glad not to see its demise, as the services of Hertz have provided me with good value overall over the years — such as the multiple times when my original rental car rate would automatically be reduced in cost or when I saved hundreds of dollars on a single car rental.
However, recent rates for vehicle rentals have been significantly more expensive overall due to the shortage of vehicles. I intend to write an article pertaining to examples of that.
All photographs ©2017, ©2018, and ©2020 by Brian Cohen.
