Hertz Global Holdings Inc. said that it won bankruptcy court approval on Friday to sell up to $1 billion in stock, capitalizing on a remarkable rally in its shares driven by speculators defying conventional market wisdom, Reuters reported. Hertz’s shares have risen 250 percent since June 4, even though their value is likely to be wiped out by the end of its bankruptcy process as creditors take over the U.S. car rental company. The shares soared as much as 680 percent earlier this week. Investors, many of them amateur traders who use apps such as Robinhood, are betting on how high they can push the stock before it collapses. The stock sale could benefit creditors seeking to recover more of their claims during the bankruptcy process. Hertz said in court filings that it would disclose to investors in the stock offering that the shares could “ultimately be worthless.” “Hertz is acting as if it wasn’t bankrupt,” said UCLA Law School professor Lynn LoPucki. “The market thinks there’s equity in this company.” Hertz, which had roughly $18.8 billion in debt at the end of March, is one of the largest companies so far to be undone by the coronavirus pandemic, which has crushed the travel industry.
