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Law360 (May 5, 2020, 9:47 PM EDT ) Car rental company Hertz told federal regulators Monday that it has reached an agreement with its lenders, buying the company two weeks to come up with a financing strategy to deal with the impact of the COVID-19 pandemic on travel.
In a U.S. Securities and Exchange Commission filing, Hertz said it has reached forbearance and waiver agreements with some of its lenders and noteholders that give it until May 22 to develop a financial strategy "that better reflects the economic impact of the COVID-19 global pandemic" in an effort to avoid a default and possible bankruptcy.
In the filing, Hertz said the pandemic has caused a "rapid, sudden and dramatic negative impact" on its business, causing it to miss an April 27 loan payment.
Last month the company announced it was laying off about 10,000 workers in North America, more than a quarter of its workforce, and that it is consolidating rental locations and adjusting fleet levels in response to reduced demand for rental cars.
The company said in the SEC filing that the holders of certain notes secured by its vehicle fleet had agreed not to force a liquidation before April 22, but that the proceeds of any fleet sales will have to be applied to paying down the notes rather than new vehicle purchases.
"However, in light of the impact of the COVID-19 global pandemic on the travel industry, Hertz believes it will not need to acquire new vehicles for its fleet through the remainder of 2020," it said.
Hertz said it had also reached an agreement with certain senior lenders to waive declarations of default until May 22.
Representatives of Hertz did not immediately respond to requests for comment late Tuesday.
--Editing by Haylee Pearl.
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