Hertz Global Holdings (HTZ) - Get Report is preparing for a possible bankruptcy filing after the vehicle rental giant failed to make lease payments due to the coronavirus shutdown, The Wall Street Journal reported.
Shares of the Estero, Florida-based company were tumbling 15.1% to $4.25.
The situation is fluid, the Journal said, citing people familiar with the matter. Hertz is in talks with lenders on a forbearance agreement to waive a default and to potentially avoid bankruptcy, the report added.
The economic shutdown has severely curtailed travel as companies look to comply with social distancing requirements. Hertz uses the operating lease to lease vehicles for its rental car fleet.
The company said in a regulatory filing that as a result of the pandemic Hertz and its subsidiaries have "experienced a rapid, sudden and dramatic negative impact on their businesses" and "faces significant ongoing operating expense."
Hertz said in the filing that as of Monday it had not made certain operating lease payments and it could be "materially and negatively impacted" if the payments are not made by the end of a grace period on May 4, and a sufficient amount of creditors don’t agree to waive any default by the end of the grace period.
"Hertz is continuing to engage in ongoing discussions with such lenders to reduce its obligations under the Operating Lease and avoid certain consequences of the payments not made on April 27," the company said.
Last week, Hertz said it would lay off 10,000 employees in North America as it looks to cut costs amid a downturn in business during the coronavirus outbreak.
The company didn't immediately respond to a request for comment.