Car rental company Hertz has filed for bankruptcy due to debt and the crippling of global travel by the coronavirus pandemic, according to court documents.
The firm, which has more than 400 outlets across the UK and Ireland, was 18.7 billion US dollars (£15.3 billion) in debt at the end of March with only 1 billion dollars (£820 million) of available cash.
It was recently forced to cut 12,000 people from its global workforce and put another 4,000 on furlough, but the measures came too late to save the 102-year-old business.
Starting in mid-March, the company lost all revenue when travel shut down due to the coronavirus pandemic and it started missing debt payments in April.
Hertz has also been plagued by management upheaval, naming its fourth chief executive in six years on May 18.
“No business is built for zero revenue,” former boss Kathryn Marinello said on the company’s first-quarter earnings conference call on May 12.
“There’s only so long that companies’ reserves will carry them.”
Hertz’s bankruptcy protection filing was hardly a surprise.
In its first-quarter report filed earlier in May with securities regulators, the company warned that it may not be able to repay or refinance debt and may not have enough cash to keep operating.
“Management has concluded there is substantial doubt regarding the company’s ability to continue as a going concern within one year from the issuance date of this quarterly report,” it said.
Under a Chapter 11 restructuring, creditors will have to settle for less than full repayment, but the business is likely to continue operating.
Hertz has been approached for comment over the implications of the bankruptcy on its British and Irish operations.