Hertz Global Holdings has filed for bankruptcy protection after demand for its services vanished during the coronavirus pandemic and talks with creditors failed to result in needed relief.
Hertz, which is over 100 years old, said in a US court filing on Friday that it voluntarily filed for Chapter 11 reorganisation. Its international operating regions including Europe, Australia and New Zealand were not included in the US proceedings.
A large portion of Hertz's revenue comes from car rentals at airports. With nearly $US19 billion ($29 billion) of debt and roughly 38,000 employees worldwide as of the end of 2019, Hertz is among the largest companies to be undone by the pandemic, says The Sydney Morning Herald.
The Florida-based company, which operates Hertz, Dollar and Thrifty car-rentals, had been in talks with creditors after skipping significant car-lease payments due in April.
On May 16, the board appointed executive Paul Stone to replace Kathryn Marinello as CEO. Hertz earlier laid off about 10,000 employees and said there was substantial doubt about its ability to continue as a going concern.
Hertz earlier signalled it could avoid bankruptcy if it received relief from creditors or financial aid the company and its competitors have sought from the US government. The US Treasury has started assisting companies as part of an unprecedented $US2.3 trillion relief package passed by Congress and signed into law.
A trade group representing Hertz, the American Car Rental Association, has asked Congress to do more for the industry by expanding coronavirus relief efforts and advancing new legislation targeting tourism-related businesses.
Even before the pandemic, Hertz and its peers were under financial pressure as travellers shifted to ride-hailing services such as Uber. To combat Uber, Hertz had adopted a turnaround plan, aiming to modernise its smartphone apps and improve management of its fleet of rental cars.
Hertz traces its roots to 1918, when Walter Jacobs, then a pioneer of renting cars, founded a company allowing customers to temporarily drive one of a dozen Ford Model Ts.