The corona pandemic has caused a huge blow to the business world. This has led a lot of companies to find bankruptcy or experiencing huge losses. The American car rental company Hertz Corporation has also suffered huge blow due to Covid 19 and has filed for bankruptcy. However, Hertz were granted permission to sell one billion in shares. This is a very bold and extraordinary move after baring such loses in America and Canada.
The court of the US state of Delaware has given this unusual permission which “held a hearing and approved the motion,” according to documents filed by the car rental company with the security and exchange commission.
The company is trying to make more money from its volatile stock price since it has filed for bankruptcy on May 23rd. The shares of Hertz have been quite volatile since past few weeks. Trading for less than a dollar, it jumped three times and even peaked at 5.53 dollars in the beginning of the week.
A spike of 37.38% was observed on Friday during the day; however, it sells 10.5% to $2.53 at 2130 GMT.
Dan Polner, a former bank from Jefferies finance company said that this move is “Absolutely insane!” Polner said “I spent a career on Wall St and 9 years at Jefferies. I’ve never seen new equity holders provide DIP [debtor-in-possession] financing for the benefit of the creditors.”
In the past, often we have observed that shares of bankrupt company lose values easily; however, this may be an exception.
Experts have suggested that this may have occurred due to abandoned flow of money provided by US federal reserve in order to combat the Covid-19 pandemic, thus providing access money for trading.
According to the Wall Street Journal, the Covid-19 hit car rental company Hertz Corporation is under a huge 19 billion dollars debts after filing for bankruptcy.