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Hertz Global Holdings Inc. is preparing to file for bankruptcy as soon as this weekend after failing to reach a standstill agreement with top lenders, according to people familiar with the matter.
The car-rental company is planning to seek chapter 11 protection in the coming days after government restrictions on travel cut down on air and ground traffic, decimating the vehicle rental market, these people said. A bankruptcy would make Hertz one of the highest-profile corporate defaults yet stemming from the coronavirus pandemic's impact on American travellers.
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Estero, Fla.-based Hertz missed a lease payment last month and convinced creditors to wait until Friday evening before declaring a default. Creditors refused to grant another extension, people familiar with the matter said.
The creditors had asked for upfront compensation from the company in exchange for a further extension, but the two sides couldn't come to an agreement, one of the people said.
Hertz is saddled with roughly $19 billion of debt, made up of $4.3 billion of corporate bonds and loans and $14.4 of vehicle-backed debt held at special financing subsidiaries.
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The company has spent years trying to restructure its business, struggling with competition from peers including Enterprise Holdings Inc. and Avis Budget Group Inc., as well as upstarts ride-sharing companies like Uber Technologies Inc. and Lyft Inc.
After a 2005 leveraged buyout by private-equity firms, Hertz went public in 2006, and activist investor Carl Icahn, who started acquiring shares in 2014, now owns more than one-third of the company and has placed three of his employees on the board.
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