A bankruptcy judge approved Hertz Global Holdings Inc.’s plan to raise cash by selling new shares that the car-rental company concedes could end up being worthless.
Judge Mary Walrath ruled that Hertz can go ahead with the offering, which the company said could take in as much as US$1 billion. Hertz was seeking to take advantage of the unusual rally in its shares to help resolve the massive debts that forced it into bankruptcy.
Hertz asked permission for the sale after a nearly tenfold increase in its stock from 56 cents US on May 26 to US$5.53 on Monday. The company told the court it would warn buyers that “the common stock could ultimately be worthless.”
The New York Stock Exchange staff is starting proceedings to delist Hertz’s stock, the company disclosed earlier this week, adding that it has appealed.
The case is The Hertz Corp., 20-11218, U.S. Bankruptcy Court for the District of Delaware.
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