Hertz creditors face tough choices in coming weeks

Hertz Global Holdings’ creditors were offered two bad choices when hammering out a deal to keep it out of bankruptcy: Cut the 102-year-old company some slack and hope it recovers, or let it slip into insolvency and try to recoup their investment in sales of its devalued rental fleet.

The holders of Hertz’s asset-backed securities blinked and gave the company until May 22 to pay them about $400m (€370m). Hertz knew its creditors would want to avoid bankruptcy, which could trigger a fire sale of devalued used cars if the ABS trusts that hold the vehicles have to liquidate, according to people familiar with the matter.