Hertz Global Holdings Inc. (NYSE: HTZ) dropped nearly 24% in after-hours trading on Monday as multiple reports suggested the company is nearing a bankruptcy filing.
What Happened
The car rental company has hired an additional advisor to help prepare for a planned bankruptcy filing, according to The Wall Street Journal.
FTI Consulting Inc. was engaged by Hertz to advise on streamlining operations ahead of a possible chapter 11 filing after it missed a deadline on a debt payment last week, people familiar with the matter told WSJ.
The Florida-based company previously tapped on investment bank Moelis & Company (NYSE: MC) and law firm White & Case LLP to advise on talks with lenders to restructure the $17 billion debt, WSJ reported last month.
In a separate report, Bloomberg said Hertz could file for bankruptcy as soon as late Monday if the talks with lenders on finding alternatives to ease its debt don't materialize.
See Also: Uber Has Automatic 'Shock Absorber' For Falling Revenue, Analyst Says After Company's Write-Down
Why It Matters
Hertz has been struggling for a while due to drying demand as app-based ride-hailing companies like Uber Technologies Inc. (NYSE: UBER) and Lyft Inc. (NASDAQ: LYFT) increasingly dominate the market.
The coronavirus (COVID-19) outbreak further worsened the situation for the debt-ridden company. In a filing with the SEC in April, Hertz said it was furloughing about 10,000 workers and cutting executive pays as it looked to weather through the pandemic.
Price Action
Hertz stock closed 2.28% higher at $3.59 per share on Monday. The shares traded 23.96% lower to $2.73 in the after-hours session.
Photo credit: dhub limited, Flickr
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