Jim Cramer: The SEC Has the Final Say on the Hertz Sale

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Hertz suspended plans to sell $500 million in potentially worthless shares following an investigation by the Securities and Exchange Commission.

Hertz said Wednesday that the prospectus for the plan, which it called an "ATM Program", was probed by SEC staff on June 15 and has now been suspended "pending further understanding of the nature and timing of the Staff's review."

"The Company is not currently offering any shares under the ATM Program," Hertz said in a statement filed with the SEC. "The Company’s advisors have been in regular contact with the commission since the Staff’s initial contact on June 15, 2020."

Earlier this week, a judge overseeing Chapter 11 bankruptcy proceedings for the car rental group approved the issue of new stock, even as lawyers for the Bonita Springs, Florida-based group argued the shares could "could ultimately be worthless” once bankruptcy proceedings are concluded.

Chapter 11 bankruptcy laws provide few, if any, guarantees for equity investors, which the courts consider owners of the company. Creditors are given priority in the restructuring of debts or the sale of assets, and usually walk away with most of whatever remains from the reorganization.

Jim Cramer said that at the end of the day, the SEC will always have the final say. Catch his full take on Hertz in the video above. 

You can follow Jim Cramer and Katherine Ross on Twitter at @JimCramer and @byKatherineRoss. Read more from Katherine Ross here.

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