Hertz Reveals The Dilemma Facing Companies In The Reddit Madness

NEW YORK (Reuters) - Months before the irrational trading in GameStop Corp, there was Hertz Global Holdings Inc. According to the statement made by the officials of Hertz, whether the stocks that had risen for no reason while the bankruptcy proceedings were being sold or not to obtain financing created a great controversy within the company. With lower cash inflows as car rentals declined, businesses like Hertz and others were generating cash flows, preferring to sell stocks over costly bankruptcy restructuring loans. Some of Hertz's C Suite shareholders and some share board members expressed concerning about these transactions. However, Hertz abandoned his plan to sell up to $ 500 million in new shares after the U.S. Securities and Exchange Commission (SEC) began to investigate. Hertz declined to comment on the matter. Behind the Reddit memes and YouTube videos, GameStop's rising stock prices over the past few weeks, movie chain AMC Entertainment Holdings Inc, household goods retailer Bed, Bath & Beyond Inc, and similar companies have remained in a similar position to which Hetz fell. Hertz raised the question of "can it be made to sell stocks in order to raise capital?" Market regulators and the United States Securities and Exchange Commission (SEC) followed the progress soon. Donald Langevorth, a Georgetown Law Center professor and former SEC attorney, said such transactions would negatively impact reputation. Langevorth also commented that these and similar situations would trigger legal concerns.

DIFFERENT APPROACHES

Many companies that are not under bankruptcy protection, such as Hertz, have remained silent on the social media-driven retail trade frenzy. GameStop has lined up the paperwork to sell $ 100 million of new stock. American Airlines Group Inc triggered a plan to sell more than $ 1 billion after its shares recently rose up to 48 % However, both companies declined to comment on the matter. Announcing that it could file for bankruptcy after the pandemic caused cinemas to close, AMC resorted to the same route and reached $ 1.2 billion $ in cash flow. In this way, bankruptcy speeches for AMC were shelved.

BEFUDDLED BOARD

This was the situation Hertz faced during the epidemic last May. The share values of Hertz, which filed for bankruptcy against 19 billion debt, increased 16 times during this period. Sources close to the subject said that managers and company consultants were stunned by the increase. Indeed, Hertz was among the most popular stocks on the platform. At the time, a Reddit commentator named "itsnotshade" commented, "The Hertz bankruptcy was CANCELED by Robinhood's 'investors'." He used his expressions. Some Hertz managers; He said the shares were almost worthless and should be backed down, fearing any offer would mean taking advantage of small investors unfamiliar with bankruptcy law. However, in the end, the board decided to continue selling shares. On June 12, US Bankruptcy Judge Mary Walrath approved Hertz's plan to sell new shares. In court files, Hertz said that he would not have to repay the money and that the move would be better for his creditors. Hertz warned the SEC and potential buyers that they would likely lose all their money. The deal started before that . Reuters was unable to determine the content of SEC's feedback on the offer. Two sources close to the subject said Hertz, who did not want to oppose the regulators, withdrew the offer the next day.

Hertz Reveals The Dilemma Facing Companies In The Reddit Madness

 

Source: Yahoo Finance

You may also like:

 

Bitcoin Does Not Slow Down After Tesla News!