%1

Hertz Global Holdings Inc. agreed to provide some value to equity holders when it leaves chapter 11, vindicating the individual traders who have insisted the company is worth something despite its bankruptcy filing. Hertz yesterday proposed in a chapter 11 exit plan that current stockholders receive warrants to purchase up to 4% of the restructured business, the first time the company has said it is worth enough to distribute some value to its owners, WSJ Pro Bankruptcy reported. The shareholder distribution would amount to a recovery of 60 to 70 cents per share, a “material return to equity,” Hertz lawyer Thomas Lauria said yesterday during a court hearing. If approved by the U.S. Bankruptcy Court in Wilmington, Del., that outcome would make Hertz a relative rarity in corporate bankruptcies, in which equity ranks behind debt and most often is wiped out. Hertz shares closed at $1.74 on Wednesday, down 8.4% on the day but up 36% year to date.

The federal government is preparing to open two new industry-specific small-business relief programs, one of them months in the works, as its signature pandemic aid effort, the Paycheck Protection Program, nears its end, the New York Times reported. The Small Business Administration said it hopes to start taking applications by the end of this week for a $16 billion grant fund for live-event businesses like theaters and music clubs. The program, the Shuttered Venue Operators Grant, was supposed to begin nearly two weeks ago, but its application system malfunctioned and collapsed, stymieing thousands of desperate businesses that have been waiting months for the promised aid. On Saturday, the agency posted additional details on its forthcoming Restaurant Revitalization Fund, a $28.6 billion support program for bars, restaurants and food trucks whose sales were devastated by the shutdowns that states imposed in response to the pandemic. The fund was created as part of last month’s $1.9 trillion economic support package. Within the next two weeks, it will begin a seven-day test intended to help the agency avoid the kind of technical fiasco that plagued the venue program. The agency has not announced a specific start date for either grant program. “Help is here,” Isabella Casillas Guzman, the agency’s administrator, said of the restaurant program. “We’re rolling out this program to make sure that these businesses can meet payroll, purchase supplies and get what they need in place to transition to today’s Covid-restricted marketplace.” Both programs offer recipients grants of up to $10 million to replace a portion of their lost sales. But both programs — which will distribute money on a first-come-first-served basis, subject to some priority rules — are expected to run out of money quickly. The money in the restaurant fund, in particular, falls far short of its needs, agency officials have acknowledged. “Everyone should apply on Day 1,” Patrick Kelley, the head of the agency’s Office of Capital Access, told attendees at a webinar last week organized by the Independent Restaurant Coalition. Lawmakers projected at least $120 billion in demand for the restaurant fund, Mr. Kelley said, but provided money for less than a quarter of that amount. The law creating the restaurant fund required a 21-day exclusive period for businesses that are majority-owned by women, veterans or socially disadvantaged individuals. The S.B.A. said that group includes those who are Black and Hispanic, as well as Native Americans, Asian-Pacific Americans and South Asian Americans.

A bidding war over Hertz Global Holdings Inc. intensified as previously outbid investors returned to the table with a counteroffer for the bankrupt car-rental company, backed by Apollo Global Management Inc. and existing Hertz shareholders, WSJ Pro Bankruptcy reported. Investment firms Knighthead Capital Management LLC and Certares Management LLC, which previously offered to buy Hertz out of chapter 11 only to be eclipsed by a competing investor group, returned with a sweetened bid late Thursday that values Hertz at $6.2 billion. Apollo has agreed to supply up to $2.5 billion in preferred equity financing for the proposed restructuring, which unlike the prior offers would pay off the rental-car company’s funded debt in full. The revised bid challenges a restructuring offer that Hertz accepted earlier this month, backed by Centerbridge Partners LP, Warburg Pincus LLC and Dundon Capital Partners LLC and valuing the company at about $5.5 billion. The competing proposal presents a choice for Hertz, which is racing to exit from bankruptcy by the end of June and has already put the restructuring terms it selected earlier this month up for approval from the U.S. Bankruptcy Court in Wilmington, Del.

Despite a rebound in the U.S. travel industry, bankrupt Hertz Global Holdings Inc. said it is still insolvent and that its stockholders will come away empty-handed in its proposed reorganization, WSJ Pro Bankruptcy reported. The rental car provider made the statement Thursday in a court filing that rebuts the claims of a committee of hedge-fund shareholders that Hertz equity is in the money. Hertz today is scheduled to appear in the U.S. Bankruptcy Court in Wilmington, Del., to seek approval of a blueprint for a chapter 11 reorganization that began last year. Such disclosure statements are required to include sufficient information to allow creditors of bankrupt companies to make informed decisions on whether to vote for a proposed restructuring. Hertz, which hopes to exit bankruptcy by June as the travel industry rebounds from a downturn brought on by the COVID-19 pandemic, said a valuation analysis expected to be filed publicly will show the company is insolvent, with insufficient value to cover its debt and no surplus left over for stockholders. The company also said it has conducted a competitive process seeking bids for control of the reorganized business. Neither of the two serious proposals that have surfaced have yielded enough proceeds for shareholders to receive a recovery, Hertz said.

The chief executive officer of AMC Entertainment Holdings Inc. said the movie-theater chain is once again “under attack” from short sellers after skirting bankruptcy during the COVID-19 pandemic, Bloomberg News reported. The volume of short sales — bets that the stock will go down — rose about 50% in March to 73.8 million shares, CEO Adam Aron said in a discussion with the social-media finance commentator Trey Collins. In a wide-ranging interview, he also touched on a proposal to raise new equity and praised the meme investors who bid the stock up to more than $20 a share in January. The shares have since retreated from that lofty level. But they rose as much as 9.4% on Thursday after Aron said he has no immediate plans to issue any of the 500 million new shares the company is asking shareholders to authorize. The company won’t seek to sell those shares in 2021 but rather in the coming years. Aron is seeking to carry out a long-term growth plan that could silence AMC’s doubters. “There are strategies we have that are very good for AMC, to come out of this pandemic, to rebuild this company,” Aron said. “But not only get back to where we were, I’d like to keep going. And I’d like to grow this company even more so.” Aron also reflected on the difficult stretch the theater chain endured. In 2019, revenue averaged $450 million a month. It slumped virtually to zero a little over a year ago, after the pandemic forced theaters to close. The chain was weeks away from running out of cash at least five times, and has since restructured its finances, banking enough cash to last through most of 2021. Other theaters have succumbed to the COVID-19 struggle. ArcLight Cinemas and Pacific Theatres, two jointly owned California movie-theater chains, announced plans this week to close permanently, underscoring the still-tenuous state of the industry.

Nearly four years after an infamous festival that was billed as an ultraluxurious musical getaway in the Bahamas left attendees scrounging for makeshift shelter on a dark beach, a court has decided how much the nightmare was worth: approximately $7,220 apiece, the New York Times reported. The $2 million class-action settlement, reached Tuesday in U.S. Bankruptcy Court in the Southern District of New York between organizers and 277 ticket holders from the 2017 event, is still subject to final approval, and the amount could ultimately be lower depending on the outcome of Fyre’s bankruptcy case with other creditors. But Ben Meiselas, a partner at Geragos & Geragos and the lead lawyer representing the ticket holders, said on Thursday that he was happy a resolution had at last been reached. “Billy went to jail, ticket holders can get some money back, and some very entertaining documentaries were made,” Meiselas said in an email mentioning Billy McFarland, the event’s mastermind. “Now that’s justice.” Lawyers representing the trustee charged with Fyre’s assets did not immediately respond to a request for comment. McFarland and the festival’s co-founder, the rapper Ja Rule, have faced more than a dozen lawsuits against their company, Fyre Media, in the event’s aftermath. The plaintiffs have sought millions and alleged fraud, breach of contract and more. McFarland is serving a six-year prison sentence after pleading guilty to wire fraud charges. In 2018, a court ordered him to pay $5 million to two North Carolina residents who spent about $13,000 apiece on VIP packages for the Fyre Festival.

Hospitality Investors Trust Inc. is nearing a deal that would hand control of the debt-laden hotel operator to Brookfield Asset Management as part of a pre-packaged bankruptcy, Bloomberg News reported. HIT, which owns about 100 hotels across the U.S., has been getting advice from law firm Proskauer Rose and investment bank Jefferies Financial Group Inc. on the restructuring talks. The real estate investment trust said in a regulatory filing last week that it was negotiating with Brookfield, its largest investor, over a potential chapter 11 filing. Hospitality Investors Trust is the latest U.S. hotel operator to consider bankruptcy after the COVID-19 pandemic spurred a slowdown in global travel. REIT Eagle Hospitality Trust filed for chapter 11 earlier this year, as have several individual hotels across the country. The REIT owns older hotels with Marriott International Inc., Hilton Worldwide Holdings Inc. and Hyatt Hotels Corp. branding. Its top markets by room are Orlando, Florida, Atlanta, and West Palm Beach/Boca Raton, Florida, according to its website and annual report. Hospitality Investors Trust no longer has sufficient cash fund its obligations and Brookfield is the only likely provider of additional liquidity, according to its 2020 annual report. Brookfield holds all of its preferred equity, worth about $441 million, and Hospitality Investors Trust converted the cash payment to payment-in-kind in December to preserve liquidity. Read more. 

Hotel debtors were the focus of a session at ABI’s Annual Spring Meeting going on now through April 22. Register today to access live programming, replays of past sessions and tap in to unparalleled networking.