The Hertz Restructuring: A Rare Win for Public Stockholders

July 8, 2021Herrick Restructuring Review

The Herrick Restructuring Review provides insights and information related to restructuring and finance litigation. The Herrick team regularly represents official and ad hoc creditor committees, hedge funds, distressed debt investors, bondholders, and other parties in interest, and often serve as conflicts or special counsel for large-scale complex litigation matters.

On May 22, 2020, amidst the deepest possible gloom about COVID-19’s impact on travel, the car rental giant, Hertz Global, filed for Chapter 11. According to reporting by Barrons,[1] during the reorganization, Hertz drastically cut the size of its fleet and closed locations. Like most shareholders of bankrupt companies, Hertz owners were likely to be wiped out. But the economy is improving: travel has returned, Hertz’s creditors are being paid in full, and according to reporting by Barrons, its shareholders are getting a package of stock, cash, and warrants. According to reporting by Barons, the 30-year warrants have an unusually long exercise period – and therefore particularly valuable.

Because of the improving economy, investors that bought Hertz shares in the first quarter of 2021 will see gross returns of 300-400% with greater potential upside on the warrants. According to reporting by Barrons, even with the run-up since April, there is still potential for investors buying the reorganized company’s shares. It’s rare for public stockholders to do so well after a bankruptcy, but it’s not unknown. Hertz looks similar to the General Growth Properties case arising out of the 2008 financial crisis. There, as in Hertz, the economy rebounded, General Growth’s business improved, and equity recovered in full.

For most public companies in Chapter 11, equity ends up with nothing. But in rare cases a debtor’s business can soar back, leading to spectacular returns for investors with an eye for value and the stomach to endure the bankruptcy process.

[1] Andrew Barry, Hertz Is About to Exit Bankruptcy. Why Its Stock is a Buy (Barrons) (

For more information on this alert or other restructuring & finance litigation matters please contact:

Stephen B. Selbst at +1 212 592 1405 or [email protected]
Elizabeth Plowman at +1 212 592 1586 or [email protected]

© 2021 Herrick, Feinstein LLP. This alert is provided by Herrick, Feinstein LLP to keep its clients and other interested parties informed of current legal developments that may affect or otherwise be of interest to them. The information is not intended as legal advice or legal opinion and should not be construed as such.