Hertz filed for bankruptcy protection Friday, unable to withstand the coronavirus pandemic that has crippled global travel and with it, the heavily indebted 102-year-old car rental company's business. The company's lenders were unwilling to grant it another extension on its auto lease debt payments past a Friday deadline, triggering the filing in US Bankruptcy Court in Delaware, per the AP. Hertz and its subsidiaries will continue to operate, per a release from the company. By the end of March, Hertz Global Holdings Inc. had racked up $18.7 billion in debt, with only $1 billion of available cash. Starting in mid-March, the company—whose car-rental brands also include Dollar and Thrifty—lost all revenue when travel shut down due to the coronavirus, and it started missing payments in April. Hertz has also been plagued by management upheaval, naming its fourth CEO in six years on May 18.
"No business is built for zero revenue," former CEO Kathryn Marinello said on the company's first-quarter earnings conference call May 12. "There's only so long that companies' reserves will carry them." In late March, Hertz shed 12,000 workers and put another 4,000 on furlough, cut vehicle acquisitions by 90%, and stopped all nonessential spending. The company said the moves would save $2.5 billion per year. But the cuts came too late to save Hertz, the nation's No. 2 auto rental company. On May 18, Hertz took the unusual step of naming retail operations chief Paul Stone as CEO and announced that Marinello would step down as CEO and from the company's board. Hertz isn't the first struggling company to be pushed into bankruptcy by the coronavirus crisis. The company joins department store chain JCPenney, as well as Neiman Marcus, J. Crew, and Stage Stores.
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