Hertz Global Holdings Inc. warned prospective new stock investors they’re all but certain to be wiped out as the car renter proceeds with an improbable share sale in the midst of its bankruptcy.

Equity holders will not see a recovery from any bankruptcy plan unless those with more senior claims, including bondholders, are paid in full, Hertz said as it offered as much as US$500 million of common stock. That would require “a significant and rapid and currently unanticipated improvement in business conditions,” the company said.

Hertz shares traded down as much as 25 per cent on Monday, though the stock is still well above where it initially traded after the company filed for Chapter 11. A bankruptcy court judge signed off on the equity sale last week after the company pledged to alert buyers about the potential they could be wiped out.

Jefferies LLC, which is leading the share offering, will get as much as 3 per cent of gross proceeds and as much as US$200,000 for its lawyers, according to the filing. A lawyer for Hertz acknowledged during last week’s court hearing that the move to sell stock while in bankruptcy probably is unprecedented.

Hertz previously said in a court filing that a share sale could raise as much as US$1 billion in cash. But that was based on the almost tenfold increase in its stock from 56 cents on May 26 to US$5.53 on June 8. The shares changed hands for as little as US$2.12 on Monday.

The offering is proceeding even as the New York Stock Exchange has started the process of delisting the stock. Hertz has appealed but acknowledges in the prospectus for its offering that a delisting still a risk.

In the filing, Hertz said it does not anticipate making lease payments on its rental cars for May or June, but will be required to start paying in full beginning in July unless the court decides otherwise. The company’s inability to work out a deal with the owners of its vehicles for leniency in April and May pushed it into bankruptcy.

Hertz also has plenty of other bills to pay. The company estimates in its initial monthly operating report filed with the court that it plans to spend US$1.28 billion over the 12 weeks ending Aug. 21.

Hertz has a lot of debt to repay before equity holders will see any money. Its bonds alone are about US$2.3 billion underwater, and that amount doesn’t even include what is owed to the banks and any lease payments, interest or depreciation that the courts could make the company return to owners of securities backed by its rental cars.

The used-vehicle market also makes the company’s job of satisfying creditors tougher. Vehicle prices have recovered in the past month but are still down from last year. Hertz has been selling cars at deep discounts to shrink its fleet to better match depressed levels of demand and to raise cash.

Hertz’s vehicles are being sold online for an average for US$1,389 below market value for used cars with comparable equipment and miles, a 43 per cent bigger discount than what its vehicles sold for in April, according to a study by iSeeCars.com, which helps consumers find deals on used autos.