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- Hertz is preparing for a potential bankruptcy filing, The Wall Street Journal reported Wednesday.
- The situation is fluid, sources told the paper, as the company hopes to reduce lease payments by May 4.
- The company laid off 10,000 employees — more than a quarter of its total workforce — in April.
- Visit Business Insider’s homepage for more stories.
Rental-car company Hertz is preparing for a potential bankruptcy filing, The Wall Street Journal reported Wednesday, as the coronavirus pandemic brings nearly all travel to a standstill.
People familiar with the matter told the paper that Hertz is working to reduce its debt payments and is in talks on a forbearance agreement that could help it avoid bankruptcy. The situation remains fluid, according to the Journal’s sources.
Hertz did not immediately respond to a request for comment from Business Insider.
Shares of Hertz declined more than 15% in trading Wednesday, as broader indices rose, following The Wall Street Journal’s report.
The news of a possible bankruptcy arrives two days after Hertz on Monday said in a regulatory filing that it “did not make certain payments” on its operating lease as it remains in discussions with lenders to reduce its payments. If those discussions aren’t fruitful by the first week of May, “Hertz could be materially and negatively impacted,” it said.
Earlier in April, the company laid off 10,000 workers — roughly 26% of its workforce at the end of 2019 — “in an effort to align staffing levels with travel demand.”
Ryan Brinkman, an analyst at JPMorgan, theorized on April 23 that government assistance could help Hertz remain solvent.
“We do think a potentially large amount of cash could be made available to Hertz from the federal government, potentially solving any liquidity concerns, although we are also uncertain with regard to the terms,” he said in a note to clients.
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