While negotiating the terms of its bankruptcy with creditors, Hertz has been informed that it can sell 200,000 would-be rental vehicles to help cover its debts.
According to a filing with the U.S. Securities and Exchange Commission (approved Friday in the U.S. Bankruptcy Court in Wilmington, DE), Hertz will be allowed to “dispose of at least 182,521 lease vehicles” between now and the end of 2020. Proceeds will then be used to pay off $650 million it owes lenders, with most funds going toward principal payments on financed vehicles.
With the pandemic knocking out manufacturing for months, this is likely welcome news for buyers eyeballing the secondhand market. Dealer lots are light on fresh product at present and times are getting tougher for consumers, making used vehicles all the more appetizing. Even though former rentals have a tenancy to be abused, they typically to go for a bit less than something living a more carefree existence — and Hertz will be desperate to offload them quickly.
Hertz Global Holdings Inc. has been in discussions with creditors in the hopes of making a deal that addresses its missed debt payments and gives the company further leeway. Rental agencies are struggling, with Hertz in the roughest shape of all. All thanks to a certain virus, business has dried up, and Hertz finds itself sitting on a pile of quickly depreciating cars it cannot afford to replace. The company’s stock also plummeted at the end of February — going from $20.29 per share to today’s $2.86.
The rental agency has until Friday to negotiate an extended forbearance agreement or drop $400 million in lease payments, but news has surfaced that lenders think Hertz declaring bankruptcy may be just as good a solution.
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