Hertz bankruptcy documents indicate potential fallout on Irish treasury units

Bankruptcy documents filed over the weekend to a US court by Hertz seeking protection from its debt holders and trade creditors show there is potential fallout on the global car hire giant’s Irish treasury units as well as trade creditor Car Trawler, which has its international head office in Ireland.

Hertz has struggled the last two months as international airline travel shrivelled and business and tourism all but ended in its markets as the Covid-19 lock downs spread throughout the world.

The Chapter 11 bankruptcy documents filed the Delaware court on Sunday give an insight into the sudden change in fortunes for a travel giant after the onset of the global economic and business storm caused by the Covid-19 pandemic around the world.

The documents filed to the Delaware bankruptcy court in the US and elsewhere also detail its huge international operations -- including Dan Ryan Car Rental Limited Ireland; Hertz International Treasury RE; Hertz Fleet Ireland; Hertz Finance Centre Ireland; Hertz Europe Service Centre Ireland, and Probus Insurance Company Europe Dac Ireland.

In the US, its subsidiaries include Dollar Rent and Thrifty.

The documents also list Hertz's top 50 trade creditors, including in 43rd of the top 50 creditors, Car Trawler of Dundrum Business Park in Dundrum in south Dublin, which is owed just over $1.28m. 

The biggest creditors include holders of hundreds of millions of its unsecured corporate bond debt in the US, including Wells Fargo and Goldman Sachs.

Among the unsecured trade creditors in the US include IBM, which is owed almost $23.5m, and US car sharing firm Lyft, which is owed $18.6m, according to the documents.

Among other major trade creditors in the US are United Airlines, which is owed $7.4m; Deloitte which is owed $7.3m; Southwest Airlines which is owed $6.2m; and Expedia which is owed $5.3m.

According to the documents, Bridgestone in the US is owed $1.9m; American Express is owed $1.6m; Nissan in Hong Kong is owed $1.2m; while a number of US cities are also listed as unsecured creditors.

According to the court filing, Hertz “and their directly and indirectly held subsidiaries” were hit by “a rapid, sudden and dramatic negative impact on their businesses from the Covid-19 pandemic and there is significant uncertainty about the timing and strength of a recovery in the travel industry and in the corporate group’s business in the coming weeks and months”.

“Notwithstanding the significant actions the corporate group has taken to reduce expenses in light of the downturn in business, revenue declines have outpaced cost reductions and, in light of the uncertainty in the timing and strength of any recovery and the significant negative impact on the marketability of used vehicles, there is and likely will continue to be, significant strain on the corporate group’s liquidity and downward pressure on the residual value of the vehicles which support certain financings of the corporate group in the coming weeks and months,” Hertz said in the court filing.