The judge who oversaw Hertz Global Holdings Inc.’s chapter 11 restructuring trimmed bondholders’ requests for early repayment premiums and interest payments, saying that some claims aren’t payable under U.S. bankruptcy law or the company’s debt contracts, WSJ Pro Bankruptcy reported. Judge Mary Walrath of the U.S. Bankruptcy Court in Wilmington, Del., said that Hertz’s unsecured bondholders weren’t entitled to collect interest payments at the contractual rate following the rental-car company’s bankruptcy filing last year. The judge also absolved Hertz of any obligation to make premium payments on bonds that were scheduled to come due in 2022 and 2024 to compensate for the early retirement of those debts. These premiums, known as make-wholes, are a common form of protection for creditors, designed to make up for lost interest payments when bonds are redeemed or refinanced ahead of the scheduled maturity. On Hertz bonds maturing in 2026 and 2028, bondholder trustee Wells Fargo Bank NA put forth a viable claim for the premium payments that will require further proceedings to evaluate, the judge said. Whether those make-wholes are in fact due will depend on whether they are the economic equivalent of unmatured interest, which the judge said she couldn’t yet decide on the record before her.
