Hertz plan draws objection from second-lien trustee, noteholders

By Sarah Lizee

Olympia, Wash., June 2 – Hertz Global Holdings, Inc.’s Chapter 11 plan drew objections from second-lien note trustee BOKF, NA and an informal group of second-lien noteholders, according to Tuesday filings with the U.S. Bankruptcy Court for the District of Delaware.

The plan purports to leave secured creditors unimpaired but then strips the second-lien secured parties of substantial rights arising under the bankruptcy code and second-lien indenture, modifying and amending the second-lien indenture by operation of the plan,” the trustee said in its objection.

BOKF claims the second-lien parties are entitled to payment in full to be left unimpaired and deprived of a vote on the plan.

“Although the debtors have ample assets to accomplish this objective, they have instead chosen to subject the second-lien secured parties to uncertainty, delay, post-effective date litigation, and dilution of their distributions,” the trustee added.

Meanwhile, the noteholders said in their objection that there is no legal or equitable justification for the debtors to deprive their over-secured creditors of all amounts owed under their respective agreements when all junior creditors will be paid in full, with significant recovery going to equity holders.

“In fact, any other outcome would violate the Bankruptcy Code and result in an inequitable windfall to equity,” the group said.

A court hearing to confirm Hertz’s plan of reorganization is scheduled for June 10.

Hertz is an Estero, Fla.-based car rental company. It filed Chapter 11 bankruptcy on May 22, 2020. The case number is 20-11218.

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