Hertz has filed for bankruptcy in the USA and Canada. Its main international operating regions, including Europe, Australia and New Zealand, were not included in the US Chapter 11 filing. Franchise sites, which are not owned by the company, are also not included in the Chapter 11 proceedings.
“The impact of Covid-19 on travel demand was sudden and dramatic, causing an abrupt decline in the company’s revenue and future bookings,” a media release said. Hertz said it took “immediate action” to prioritise the health and safety of employees and customers and eliminate “all non-essential spending”. “However, uncertainty remains as to when revenue will return and when the used-car market will fully re-open for sales, which necessitated today’s action.”
Hertz had already cut 10,000 jobs in North America, or 26.3% of its global workforce, to save money after the coronavirus shutdowns paralysed travel and crippled the economy. Chapter 11 is a mechanism that allows a company that is no longer able to repay its debt to restructure itself without creditors.
The Wall Street Journal reported that Hertz held debts of roughly US$19 billion, in addition to nearly 700,000 vehicles sitting idle because of the coronavirus.
“The financial reorganisation will provide Hertz a path toward a more robust financial structure that best positions the company for the future as it navigates what could be a prolonged travel and overall global economic recovery,” said the Hertz statement.