Hertz, a car rental company based in Estero, filed for Chapter 11 bankruptcy protection Friday.
“The impact of COVID-19 on travel demand was sudden and dramatic, causing an abrupt decline in the Company’s revenue and future bookings,” reads a statement released by the company.
“Hertz took immediate actions to prioritize the health and safety of employees and customers, eliminate all non-essential spending and preserve liquidity.”
The corporate headquarters for Hertz relocated to Estero and opened in 2016.
The company said the coronavirus pandemic led to the decision to file for bankruptcy and take action to strengthen its capital structure.
Hertz locations remain open, and are considered an essential business in most states. The company has roughly $1 billion in cash on hand for continuing operations.
“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 company statement reads.
“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.”
By the end of March, Hertz Global Holdings Inc. had racked up more than $24 billion in debt, according to the bankruptcy filing, with only $1 billion of available cash.
Starting in mid-March, the company — whose car-rental bands also include Dollar and Thrifty — lost all revenue when travel shut down due to the coronavirus. The company made “significant efforts” but couldn’t raise money on the capital markets, so it started missing payments to creditors in April, the filing said. Hertz has also been plagued by management upheaval, naming its fourth CEO in six years on May 18.
Attracting corporate headquarters for Hertz to Florida was a landmark achievement for then-Gov. Rick Scott, himself a resident of Southwest Florida. He announced job numbers in January 2016 from the corporate headquarters, two years before he won a U.S. Senate seat over Democratic incumbent Bill Nelson.
“I like anybody that adds jobs, and the jobs that Hertz brought here is outstanding,” Scott said at the time.
The company received millions in economic incentives to come to Florida on the promise of creating at least 700 jobs.
Leadership for the company promoted an optimistic message about the future, even while taking the dramatic step.
“Hertz has over a century of industry leadership and we entered 2020 with strong revenue and earnings momentum,” said Hertz President and CEO Paul Stone.
“With the severity of the COVID-19 impact on our business, and the uncertainty of when travel and the economy will rebound, we need to take further steps to weather a potentially prolonged recovery.
“Today’s action will protect the value of our business, allow us to continue our operations and serve our customers, and provide the time to put in place a new, stronger financial foundation to move successfully through this pandemic and to better position us for the future. Our loyal customers have made us one of the world’s most iconic brands, and we look forward to serving them now and on their future journeys.”
Content from the Associated Press was used in this report.