Hertz Sets Deadline for Knighthead to Submit Revised Buyout Bid

Hertz Global Holdings Inc. asked a judge to set rules for an auction to decide whether Knighthead Capital Management and Certares Management can displace the company’s current reorganization sponsor, a group backed by Centerbridge Partners.

The car rental company gave the Knighhead coalition until May 2 to submit their best offer to buy the company out of bankruptcy, according to a court filing Monday. Should that proposal meet all Hertz’s qualifications, the company would hold an auction on May 10.

The battle over ownership of Hertz has been heating up amid surging demand for travel in the U.S. The company earlier this month picked a plan from Centerbridge Partners, Warburg Pincus and Dundon Capital Partners that outbid an earlier Knighthead deal. Both groups have since revised their plans.

Hertz has said it’s seeking to exit bankruptcy by the end of June. Leaving court protection then would allow the reorganized company to rent its cars to summer travelers and sell older vehicles into a hot used-car market. Competitor Avis Budget Group Inc. has seen its stock more than double this year.

Last week, U.S. Bankruptcy Judge Mary Walrath gave Hertz permission to pay Centerbridge a so-called breakup fee if its plan isn’t chosen. Walrath also allowed Hertz to start the process of collecting creditor votes on that proposal.

If the Knighthead group makes an acceptable bid and Centerbridge refuses to counter, no auction would be held. Instead, Knighthead would become the new reorganization sponsor.

The case is Hertz Corp. 20-11218, U.S. Bankruptcy Court, District of Delaware (Wilmington). To view the docket on Bloomberg Law, click here.

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