Hertz Must Sell Nearly 200,000 Cars by December to Pay Back Creditors
If you’re in the market for a used, white Camaro, then hey—good news.
The rental car industry, like many others, has taken a massive beating at the hands of the coronavirus pandemic, and we’re now starting to see effects of the industry’s downturn. Hertz has been struggling to stay afloat after a significant portion of its business evaporated nearly overnight, and it declared bankruptcy in May. But as the Wall Street Journal reports, the company will be able to offload a big chunk of its vehicle fleet to help repay creditors.
Hertz Global Holdings Inc. said it has reached a temporary agreement with the group of creditors that had been fighting against the company’s plans to shed a large portion of its leased vehicle fleet. The filing states that Hertz and its lenders have found middle ground that allows repayment of debt in monthly installments through the end of the year, but the deal involves a fire sale of nearly 200,000 vehicles to raise funds for repayment.
The agreement still needs to be approved by a court, but if the deal makes it through, Hertz will need to sell off over 182,500 vehicles by the end of 2020. While that number is higher than the 144,000 that company officials originally proposed, the sales will still leave Hertz with more than 300,000 vehicles nationwide. The deal also allows Hertz to keep $900 from the sale of each vehicle that is sold.
While massive, the $650 million payment deal only represents about half of what Hertz is actually obligated to pay. Part of the bankruptcy process in the U.S. involves giving greater flexibility in repaying debts, which in this case involves a complicated financing structure with asset-backed securities.
The real-world impacts of this kind of sell-off have yet to be seen but many expect the glut of used cars to drive down prices for buyers and make it more difficult for individuals to get a decent return on their used vehicles. It’s unclear which vehicles Hertz will be selling, but the company already offers a large variety of former rentals on its website. It’s a good place to score a screaming deal on everything from a used BMW X5 to a stripped-down Ford Focus. You may even be able to find a few ‘Vettes thrown in the mix.
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