Hertz entered the pandemic with $17B in debt — and went bankrupt in three months

Hertz, one of the world's largest car rental companies, entered 2020 with approximately $17 billion in debt, much of it tied to its vehicle fleet through asset-backed financing. The business model depended on continuous travel demand and the ability to refinance fleet debt as vehicles depreciated.

When the pandemic collapsed global travel in March 2020, Hertz's revenue dropped by over 70% almost overnight. The company could not make its fleet financing payments, and lenders demanded repayment. Unlike airlines, which received government bailouts, car rental companies were largely excluded from relief programs.

Hertz filed for Chapter 11 bankruptcy in May 2020. The company emerged in 2021 after a restructuring that reduced its debt and fleet. Ironically, the used car market boomed during the pandemic, and Hertz's remaining fleet became more valuable. The case illustrated the fragility of a business model built on high leverage and continuous demand.

Hertz's $17B debt was tied to vehicles that needed constant travel demand to refinance; when revenue dropped 70%, lenders demanded repayment and bankruptcy followed.

Hertz carried $17B in debt, mostly fleet-backed, requiring continuous revenue to service.

The pandemic collapsed travel demand by 70%+ almost overnight, eliminating the revenue needed to pay the debt.

Car rental companies were excluded from government relief programs that bailed out airlines.

The asset-backed financing structure meant that when revenue stopped, lenders demanded immediate repayment.

High leverage is a bet on continuity. Hertz's $17B debt assumed travel would never stop. When it did — for three months — the company was bankrupt.

Hertz emerged from bankruptcy in 2021 with reduced debt and a smaller fleet. The used car boom helped the recovery. The case is cited alongside Toys R Us as an example of how leverage can kill an otherwise viable business.