Hertz May be Preparing for a Possible Bankruptcy

American car rental company Hertz may be preparing for a possible bankruptcy filing according to a new Wall Street Journal report.

Shares of the stock fell a little over 15% on the news.

The WSJ has reported that the situation is fluid after the vehicle rental giant failed to make lease payments due to the coronavirus shutdown.

The situation is fluid, the Journal said, citing sources familiar with the matter. According to the report, Hertz is in talks with lenders on a forbearance agreement to waive a default and to potentially avoid bankruptcy.

Hertz said in a regulatory filing that as a result of the pandemic the company and its subsidiaries have “experienced a rapid, sudden and dramatic negative impact on their businesses” and “faces significant ongoing operating expense.”

As of Monday Hertz had not made certain operating lease payments according to the filing, and it could be “materially and negatively impacted” if the payments are not made by the end of a grace period on May 4th. It added that a sufficient amount of creditors don’t agree to waive any default by the end of the grace period.

“Hertz is continuing to engage in ongoing discussions with such lenders to reduce its obligations under the Operating Lease and avoid certain consequences of the payments not made on April 27,” the company said.

Recently Hertz also revealed that it plans to lay off 10,000 employees in North America as it looks to cut costs amid a downturn in business during the coronavirus pandemic.

Disclaimer: We have no position in Hertz Global Holdings Inc. (NYSE: HTZ) and have not been compensated for this article.