Why did Hertz, the global car rental giant, file for bankruptcy?

American car rental giant Hertz Global Holdings filed for bankruptcy in Delaware, because travel restrictions and the global recession destroyed the demand for car rental.

Hertz began to lay off employees in March this year to save cash, and business and leisure tourism came to a standstill due to emergency measures to contain COVID-19. On April 29th, Hertz Company disclosed that it had omitted a large amount of rental money related to car rental.

Hertz has been negotiating with lending institutions and the U.S. Treasury about the possibility of rescue. However, due to the sluggish demand, the huge fleet and the falling prices of used cars, Hertz does not have enough liquidity to maintain the market recovery, and the company has accumulated debts of $/kloc-0.7 billion.

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Paul E. Stone, CEO of the company, said in a statement: "Today's action will protect the value of our business, enable us to continue to operate and serve our customers, and gain time to build a new and stronger financial foundation to successfully survive this epidemic and lay the foundation for our future." In addition, Hertz also said that it has sought assistance from the US federal government, but the support funds to support the industry are "unavailable".

After the news that Hertz filed for bankruptcy came out, Hertz's share price plummeted nearly 40% in a few hours. The company closed down 7.49% to $2.84 last Friday.