In an aside near the end of Lord & Taylor and Tailored Brands, parent of Men's Wearhouse and Jos. A. Bank, file for bankruptcy, tales of the Retail Apocalypse and pandemic, I noted an omission and promised to correct it.That was only a down payment on that promise, but Company Man made fulfulling it even easier yesterday by uploading The Decline of Hertz...What Happened?I've been skipping over the Hertz bankruptcy. I've been confining my covering of travel to driving updates, but maybe it's time to look at air travel, hotels, and car rentals.I'm following up on that promise even earlier than I expected, as I came across U.S. execs score bonuses just before bankruptcy by Reuters, in which both Hertz and JCPenney play starring roles.
In May of 2020, the rental car company Hertz filed for bankruptcy. This video takes a look at their constantly changing history while trying to find reasons behind their recent troubles.Viewer Peter Barlow summarized Hertz's issues in his comment.
That’s private equity for you: do leveraged buyout then leverage the acquired company to buy more companies. Take company public, run off with the cash. Asset Strip the acquired company. Declare bankruptcy and walk away. Rinse and repeat. (Also cars are some of the worst assets to leverage against as hey presto they depreciate every single month)Bingo. As I've written about retail chains, companies that were in trouble before the Retail Apocalypse, or in this case, the COVID-19 pandemic, are the ones that are failing now. Hertz is no exception. One of the causes of trouble is debt from mergers and aquisitions in addition to private equity. That's an argument for corporate reform if I ever saw one.