By Becky Yerak 

Hertz Global Holdings Inc. won bankruptcy-court approval to hand control of the rental-car company to Knighthead Capital Management LLC, Certares Management LLC and other investors that won a bidding war over the company.

While shareholders typically receive nothing in corporate bankruptcies, the winning bid for Hertz will provide a distribution of more than $7 and as much as $8 a share to the company's current owners, according to Hertz's estimates.

The winning bid reflected a dramatic rise in Hertz's prospects in recent weeks as investor groups competed to buy the company out of bankruptcy. Earlier offers from potential bidders offered nothing for Hertz's equity, and, as recently as mid-April, the company said its shareholders would come away empty-handed in the chapter 11 proceedings. Hertz filed for bankruptcy last May, fighting for survival as its revenue plummeted during the pandemic.

"Today we're on the verge of a remarkable recovery," company lawyer Tom Lauria said at a virtual hearing Friday in the U.S. Bankruptcy Court in Wilmington, Del.

Covid-19 vaccinations and a rebound in consumers' eagerness to vacation are expected to reinvigorate the travel business and ease Hertz's path out of chapter 11. Hertz's creditors will be paid in full, and shareholders will see a substantial return, Mr. Lauria said.

Rachel Strickland, a lawyer for bondholders that were outbid for control of the company, said they would fight to ensure that they would have everything paid to them that was due, including accrued interest.

Having gotten the auction results approved, Hertz is expected to seek confirmation of its chapter 11 plan next month, its last major step in court before leaving bankruptcy.

Hertz's trip through bankruptcy court was notable for the interest it sparked among individual investors who piled into the stock despite the bankruptcy filing, driving its price up nearly a year ago.

Hertz tried to capitalize on the rally last June by selling stock, but suspended efforts to sell shares after the Securities and Exchange Commission raised questions. Hertz was later delisted from the New York Stock Exchange, but continued to trade over the counter.

At the Friday court hearing, Mr. Lauria said the Hertz bankruptcy "proves that no one, not even the SEC or the New York Stock Exchange, knows the future." Hertz was shot down, Mr. Lauria said in regards to its plans to sell shares last year.

The SEC didn't immediately respond to a request for comment. The NYSE declined to comment.

Write to Becky Yerak at becky.yerak@wsj.com

 

(END) Dow Jones Newswires

May 14, 2021 17:19 ET (21:19 GMT)

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