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Bankrupt Hertz Global Holdings Inc. and its bondholders are squaring off over how to shrink its nearly half-a-million vehicle fleet, Bloomberg News reported. Market watchers say that the outcome could upend the $25 billion rental-car lease ABS industry. The cars are housed in an entity linked to Hertz’s asset-backed securities and leased to the rental giant. Hertz wants a judge to allow it to convert the master lease into 494,000 separate agreements so it can reject the terms on 144,000 vehicles. That would allow Hertz to save roughly $80 million a month while it hangs onto the remainder of the cars as it seeks to emerge from bankruptcy a viable company. If the motion fails, Hertz may press for a reduction in payments to creditors. Hertz is seeking to avoid liquidation and strengthen its balance sheet via the restructuring, while bondholders with billions of dollars at risk who’d grown confident of their chances of being paid back are now threatened with losses. Moreover, industry insiders worry that if Hertz is successful in court, it would redefine the rules that have long governed the ABS market.

Hertz Global Holdings Inc.’s bonds were valued at 26.375 cents on the dollar in a credit derivatives auction yesterday, casting doubt on the possibility that shares will have any value when the company emerges from bankruptcy, Bloomberg News reported. The price, determined in an auction that’s used to settle hundreds of millions of credit default swaps tied to the bankrupt company, means traders who bought protection against the car rental company’s failure will be paid 73.625 cents for every dollar insured. The relatively low bond recovery level suggests Hertz shareholders are likely to see their holdings go to zero as the company reorganizes in bankruptcy court. Hertz is among several bankrupt and near-bankrupt companies whose shares have surged amid a burst of interest from retail investors, even though equity is typically wiped out in chapter 11 proceedings. Hertz shares at one point doubled early yesterday after analysts at Jefferies wrote that firms like CarMax Inc. and AutoNation Inc. could be interested in purchasing Hertz’s roughly 150,000-car inventory. The stock closed at $1.61, up 30 percent from a day earlier. In a highly unusual move, Hertz attempted to sell new shares last week to raise cash and help pay off creditors before calling off the effort amid scrutiny from the Securities and Exchange Commission.

After months of doing their jobs from home, many executives and employees say all those hours in the sky and nights away from home may not be necessary going forward, the Wall Street Journal reported. A major decline in corporate travel spending would have vast implications for the nation’s airlines, hotels and rental-car companies. Air carriers have predicted it could take years for business travel to recover to their pre-Covid-19 levels, though a vaccine could bolster confidence. Delta Air Lines Chief Executive Ed Bastian said on an industry webcast earlier this month that the carrier would operate twice as many domestic flights in July as in May. Still, “business travel is very limited right now,” he said. After 9/11, it took the airline industry six years to recover. As many companies look to cut costs, travel is an easy place to start, industry veterans say. “It’s a lot more palatable to say you’re going to cut 30% of your travel, versus lay off more people,” said Sloan Dean, chief executive of Remington Hotels, which operates nearly 90 properties for brands that include Marriott, Hilton and Hyatt.

Hertz Global Holdings Inc. is asking a bankruptcy judge to let it take advantage of the quixotic surge in its stock by selling up to $1 billion of new shares, Bloomberg News. Stocks of bankrupt companies typically get wiped out, but after an enormous two-week rally, the car rental giant envisions offering as many as 246.78 million common shares with help from Jefferies LLC, according to a court filing. Judge Mary Walrath set a hearing for today to consider the idea. Investors are bidding up Hertz and other bankrupt companies on optimism that the economy and specifically air travel is poised to rebound. Hertz might also benefit from prices of used cars at auctions coming all the way back from a mid-April collapse. Hertz based its request to the court on a nearly tenfold increase in its stock from 56 cents on May 26 to $5.53 on Monday, according to the filing. While the stock has slid to less than half that level, Hertz said a sale of its unissued shares still could help cover its debts. “The recent market prices of and the trading volumes in Hertz’s common stock potentially present a unique opportunity for the debtors to raise capital on terms that are far superior to any debtor-in-possession financing,” the company said, referring to a traditional bankruptcy loan. A share offering would avoid new interest, fees and restrictions on Hertz’s finances and wouldn’t impose any claims from a bankruptcy loan that would outrank existing creditors, the company said. Hertz said it would warn any potential buyers “the common stock could ultimately be worthless.”

Siris Capital Group LLC and Elliott Management Corp. affiliates are supplying up to $1 billion in financing to their struggling travel-booking platform Travelport Worldwide Ltd., defying the company’s lenders and touching off a legal fight, the Wall Street Journal reported. Travelport said that the loan package, which closed Friday, provides it with much-needed cash to weather the drop-off in passenger flight bookings stemming from the coronavirus pandemic. But the maneuver relies on shifting valuable assets away from Travelport’s lenders, setting up the latest confrontation on Wall Street over how far private-equity firms can go to protect stakes in troubled companies — sometimes at creditors’ expense. The financing is backed by intellectual property that was previously within lenders’ grasp but is now pledged as security for Elliott and Siris, which took Travelport private last year in a roughly $2 billion deal. Lenders including Blackstone Group Inc. have said that the transaction isn’t allowed under their debt documents and strips away property that should be available to satisfy their claims. A New York court might get the final say after Travelport filed a lawsuit on Friday seeking a declaration that no default has occurred.

The parent company of Advantage Rent a Car filed for bankruptcy protection, the second big car-rental company to seek protection from creditors in less than a week as travel restrictions from the coronavirus pandemic continue to ripple through the economy, WSJ Pro Bankruptcy reported. Private-equity-owned Advantage Holdco Inc. filed for chapter 11 in U.S. Bankruptcy Court in Wilmington, Del., along with a half dozen affiliates, including E-Z Rent a Car LLC, a sister company in the low-price rental sector. Debts top $500 million, according to papers filed late in the evening Tuesday. Advantage follows Hertz Global Holdings Inc., one of the nation’s biggest rental-car companies, into chapter 11 as the fallout from the coronavirus pandemic has devastated air travel, a key component of the rental car business. The pandemic has also caused big drops in the value of rental-car company fleets and virtually frozen the used-car market. Advantage, the fourth-largest rental car company in North America, is owned by funds managed by Catalyst Capital Group Inc., a Canadian investment firm based in Toronto. Hertz at one point owned Advantage, having purchased the assets of its smaller rival out of bankruptcy in a 2009 deal. Advantage was later divested so Hertz could get regulatory approval to acquire another bargain operator.

Trustees of the publicly-owned amusement park Conneaut Lake Park in Pennsylvania announced yesterday that the park will not open for the summer season, GoErie.com reported. The 128-year-old park is currently operating under terms of chapter 11 bankruptcy. Park trustees said in a letter posted on the park’s website that they have been in touch with their secured creditors regarding the bankruptcy plan. Although Crawford County, Pa., is scheduled to move to the green phase of Gov. Tom Wolf’s reopening plan on Friday, trustees said that they have been given no guidance over whether amusement parks are even allowed to operate in that phase. According to the trustees, “Moving to the green phase only allows businesses to operate at 50 percent capacity. Compounding this are social distancing protocols and sanitation requirements, all resulting in a diminished operations model that would require resources the park simply does not have while working its way out of bankruptcy.” Trustees also cited concerns over increased liability costs for parks operating during a pandemic.

The Federal Reserve said yesterday that U.S. businesses saw limited evidence of a recovery in recent weeks, with economic activity continuing to decline amid the coronavirus pandemic, the Wall Street Journal reported. The labor market continued to deteriorate and consumer spending fell further as retailers and restaurants remained largely closed in most of the country through mid-May, the Fed said in its periodic report of anecdotes from businesses around the country known as the “beige book.” “Although many contacts expressed hope that overall activity would pick up as businesses reopened, the outlook remained highly uncertain and most contacts were pessimistic about the potential pace of recovery,” the central bank said. The latest edition of the beige book contains information through May 18, some two months after nonessential businesses around the country shut down to help contain the spread of the novel coronavirus. Leisure and hospitality continued to see the most severe effects of efforts to contain the pandemic.