Hertz emerges from bankruptcy, calls on directors to create new board of directors
With Hertz coming out of bankruptcy with a positive outcome for shareholders, it reminds us of the interplay between the equity markets and the bankruptcy alternative.
Some companies facing financial problems during the pandemic were able to avoid filing for bankruptcy altogether because of their ability to raise the necessary funds through a stock offering. Hertz provides an example of a situation where filing for bankruptcy instead of erasing the value of equity increased.
If proper disclosures can be made, a stock offering may negate the need for bankruptcy. It is in any case an alternative to consider.
“The competition for control of Hertz has soared in value that it has been able to fully cover its debt and provide good compensation to shareholders, who are normally wiped out when companies go bankrupt. After coming out of bankruptcy, Hertz shares will continue to be traded over-the-counter, although majority investors are considering eventually returning to the stock market, people familiar with the matter said. “
© 1994-2021 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC All rights reserved.Revue nationale de droit, volume XI, number 187