Hertz files for bankruptcy | updated

Rental provider Hertz has filed for bankruptcy in the USA and Canada following losses during the Coronavirus pandemic.

The business lost all its revenue and amassed debts of more than £15bn, with the majority of its branches closed for the last eight weeks.

It has cut 12,000 jobs worldwide and put 4,000 workers on furlough.

The Chapter 11 filing does not apply to Hertz operations in Europe, Australia and New Zealand, which continue to operate as usual.

A statement issued by Hertz said: “The impact of COVID-19 on travel demand was sudden and dramatic, causing an abrupt decline in the company's revenue and future bookings.

“Hertz took immediate actions to prioritize the health and safety of employees and customers, eliminate all non-essential spending and preserve liquidity. However, uncertainty remains as to when revenue will return and when the used-car market will fully re-open for sales, which necessitated today's action.

“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.”

The company has filed for a Chapter 11 restructure, which means its creditors will have to accept less than full repayment of its debts.

Hertz said all its businesses globally, including its Hertz, Dollar, Thrifty, Firefly, Hertz Car Sales, and Donlen subsidiaries, are open and serving customers. All reservations, promotional offers, vouchers, and customer and loyalty programs, including rewards points, are expected to continue as usual.

Scot Group, which trades as Thrifty Car & Van Rental & Dollar Rent a Car in the UK, holds the Master Franchise for both brands and is an entirely separate financial entity sharing no systems, fleet, insurance or indeed human resource.

Despite any financial announcements made in the United States by Hertz, including Chapter 11 bankruptcy protection, Scot Group remains completely unaffected.

Martin Wilson, Scot Group managing director, said: "Although the impact of COVID19 has been felt across the automotive sector, particularly the vehicle rental sector, the impact to Scot Group while challenging has not been as great as some others due to our mix of business. Many rental businesses rely heavily on the leisure market which of course has been the worst hit as the crisis developed, while Scot Group enjoys some 80% of it's revenues from the Domestic Corporate market. Corporate partners include much of the FN50, the direct Insurance sector, manufacturer replacement programmes, the delivery supply chain and Government departments that include defence and front line services."

The company's sales team continues to grow its footprint in the corporate sector and with Government advice currently centring around avoiding the use of public transport, the business sees its 'new normal' arriving sooner than most. It said bookings for long term rental have shown a sharp rebound and daily rental in both car and commercial vehicle is growing day after day.