The car rental company Hertz could be getting ready to file for bankruptcy, possibly as soon as this weekend. Hertz Global Holdings Inc. already experienced a slowdown in revenue before the pandemic, the Stay-at-Home orders put in place across the U.S., and the other obstacles around the world. This all combined to hurt the company’s bottom line even more, as The Wall Street Journal reported on Friday.
Hertz is the second-largest car rental company in the country, with roughly 770,000 vehicles in its fleet. However, the company doesn’t own the automobiles outright but instead leases them through several different financing subsidiaries. The company has also been in contact with its creditors after it missed payments on its numerous leases in April. The company currently holds roughly $19 billion in debt, as well.
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Some of that debt consists of $4.3 billion in corporate bonds and various loans, with another $14.4 billion in vehicle-backed debt held at financing subsidiaries. In 2020, shares of Hertz had already fallen a whopping 75 percent, and on Friday dropped another 7.5 percent. If the company does end up filing for bankruptcy, it would make them one of the most prominent companies to go under as a result of the pandemic.
So far, major retail outlets including Pier 1, J. Crew, Neiman Marcus and JCPenney have all declared bankruptcy in recent weeks. All of them cited the current pandemic as the primary reason for the closures. While not quite as bleak, both Victoria’s Secrets and Bath & Body Works will see hundreds of storefronts close across the U.S. and Canada as a means to stay afloat in an uncertain economic time.
Retail consultant Doug Stephens spoke to CTV’s Your Morning about how the pandemic has exposed a few critical weaknesses in some of the companies that have been hit the hardest. “Much as it does with human beings, it finds pre-existing conditions or underlying ailments in companies as well,” Stephens explained, citing numerous factors, like “carrying too much debt, that they’re too reliant perhaps on physical stores, or in some cases, it’s just brands that have had trouble sort of finding their positioning for years.” He also predicted that “as this crisis progresses and as brands come under the stress of this crisis as it protracts,” more big-name companies will end up going under as a result.
