Hertz, US-based car rental firm, filed bankruptcy protection on Friday amidst the COVID-19 pandemic. The firm is said to have filed for chapter 11 bankruptcy to reorganize and strengthen its capital structure in the wake of the pandemic outbreak.
Owing to the shutdown in global travel, the company faced the issue of earning profits as most of the firm’s business came from airport rentals. The travel ban in the countries has led to many rental companies struggle to survive in the market.
The century-old company in March had laid off around 10,000-20,000 employees, a substantial amount from its 48,000 global workforces, as a response to the pandemic-induced shutdown across the globe. In the past few weeks many other companies have requested bankruptcy protection including J.C. Penney, J. Crew, Neiman Marcus, and Gold’s Gym.
In a News Release on Friday, the company said that the impact of COVID-19 on travel demand was sudden which caused an abrupt regression in the company’s revenue and future bookings.
The company also mentioned that they had immediately taken all the necessary precautions and actions to prioritize the health and safety of their employees and passengers along with eliminating non-essential spending and preserve liquidity. But the uncertainty over when the market will come back to normalcy led the company to take this decision.
“The financial reorganization 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 firm in the release dated May 22, 2020.
The company also stated that Hertz and its subsidiaries will remain open for the customers along with continuing the all customer and loyalty programs as per usual. The organization’s international operating regions such as Europe, Australia, and New Zealand are not included in the US chapter 11 dealings.