One of the advantages of filing for Chapter 11 bankruptcy is that it allows for a business to reorganize itself and pay its creditors over time. Rather than having to shut down all operations, a business is given the opportunity to stay alive while under Chapter 11 bankruptcy protection. In fact, Hertz, a car rental company based out of Florida, recently filed for Chapter 11 bankruptcy amid the COVID-19 pandemic. As a part of its bankruptcy deal, the United States Securities and Exchange Commission is requiring that the company get rid of 182,521 cars.
The company, which filed for bankruptcy back in May, must “dispose of” the vehicles by December 21, 2020. Business Insider cited that this is part of a $650 million temporary deal Hertz made with a creditor group. According to the source, Hertz must “pay its asset-backed securities lenders $650 million of rent in equal installments per month from July to December.” The source learned from an unidentified person who is familiar with the deal that the amount the company must pay is only “about half of what Hertz is contractually obligated to pay.”
That same individual says the company is also “trying to arrange up to about $2 billion in financing to help it get through chapter 11.”
Under the deal, which is still waiting to be approved in court, Hertz is allowed to retain $900 for each vehicle it sells. The rest of the money will go toward repaying lenders, according to Business Insider. After all the vehicles are sold, Hertz will likely be left with about 310,000 leased cars.
How does Hertz plan on “offloading” these vehicles?
While it isn’t clear how the company plans to sell the vehicles, the source says those who are looking to make a used-car purchase might be able to successfully do this through Hertz’s website should it decide to sell them directly from there.
How do I know if Chapter 11 bankruptcy is right for my business in Tulsa, OK?
If your business has been struggling to meet certain financial obligations and you don’t want to lose it, consider contacting the Henson Law Firm, PLLC to speak with a Tulsa, OK bankruptcy attorney. The OK bankruptcy lawyers at the Henson Law Firm, PLLC can explain more in-depth what Chapter 11 bankruptcy entails and can help you decide if this is the next step you should take to gain control over your debt.
The Henson Law Firm, PLLC is located at:
601 S. Boulder, Suite 600
Tulsa, OK 74119
*We are a debt relief law firm in Tulsa, Oklahoma.
*We help people file for bankruptcy relief under the Bankruptcy Code.