Hertz, which had filed for Chapter 11 protection in May 2020 as it was badly hit by the pandemic, announced yesterday that it had two buyers, which might steer the company out of bankruptcy.
In May, Hertz said that the impact of COVID-19 on travel demand was “sudden and dramatic,” causing an abrupt decline in its revenue and that the financial reorganization would best provide a path forward, according to a statement at the time. Reduced demand across its locations decimated its revenue, for example, in April 2020, the first full month of operating during the pandemic, the company’s global revenue was down approximately 70% from April of 2019, according to court filings.
Yesterday however, the company announced that two investors, credit-investment management firm Knighthead Capital Management and travel and tourism investment platform Certares Opportunities will pay Hertz $4.2 billion, according to court filings.
Certares and Knighthead have recently formed the CK Opportunities Fund, a co-managed vehicle specifically dedicated to investments in travel and leisure, according to the court filings. Most recently, Knighthead led “transformational financings in restructuring proceedings for PCG and LATAM Airlines Group,” and most recently, in partnership with Certares, in Azul Brazilian Airlines.
Certares’ investments meanwhile, include American Express Global Business Travel, Internova Group and TripAdvisor.
According to the court document, following the commencement of the chapter 11 proceedings., the company first tried to stabilize its business, and then, began formulating a plan of reorganization with the goal of emerging from chapter 11 in the summer of 2021.
“Specific efforts toward a plan began in November of 2020, when the Company held a series of meetings with various constituents and potential plan sponsors to jump-start a competitive process. The Company also established a data room and conducted a series of diligence meetings with several potential plan sponsors.
Eventually, the Company received three credible plan proposals,” according to the court documents. The reorganization plan still needs approval and the Bankruptcy Court will hold a hearing on April 16, 2021.
More from GOBankingRates