Sources for Bloomberg said the rental vehicle company is looking to cut a deal with its creditors over missed debt payments, but the parties have yet to reach an agreement, which could force Hertz into filing for bankruptcy protection in the coming days.
The firm, which earns much of its income from vehicle rentals at airports, said it had been affected by the sharp downturn in global travel.
Hertz's global operations in Europe, Australia and New Zealand as well as its franchised locations in the United States are not affected.
Under a Chapter 11 restructuring, creditors will have to settle for less than full repayment.More news: Ukraine to investigate leaked calls between Joe Biden and ex-president | Ukraine
Hertz is preparing to file for bankruptcy this weekend after failing to reach an agreement with lenders, The Wall Street Journal reported Friday.
USA airlines have so far avoided similar fates after receiving billions of dollars in government aid, an avenue Hertz has explored without success.
Hertz and its subsidiaries will continue to operate, according to a release from the company.
"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", said Hertz President and CEO Paul Stone in a statement Friday.More news: GNA takes military camp south of Tripoli
What they're saying: Hertz locations will remain open for now, and the company says it has over $1 billion in cash on hand to support operations.
Automotive News reported Hertz had until Friday to make $400 million in lease payments.
Hertz also has traditional credit lines, loans and bonds with conditions that can trigger defaults based on missing those lease payments or failing to meet other conditions, such as delivering a timely operating budget and reimbursing funds it has borrowed. The US Treasury has started assisting companies as part of an unprecedented US$2.3 trillion relief package passed by Congress and signed into law.
Even before the pandemic, Hertz and its peers were under financial pressure as travelers shifted to ride-hailing services such as Uber.More news: Seahawks' offer to running back Devonta Freeman was worth up to $4M