FILE PHOTO: Logos of car rental company Hertz are seen outside Paris Charles de Gaulle airport in Roissy-en-France during the outbreak of the coronavirus disease in France May 19, 2020. REUTERS/Charles Platiau/File PhotoShare this contentOperating under bankruptcy protection last spring once the COVID-19 pandemic wiped out its business, the car-rental giant confronted an extraordinary situation: Its stock price was skyrocketing for no apparent reason.
Over the past few weeks, soaring stock prices of GameStop - along with movie theater chain AMC Entertainment Holdings Inc, home goods retailer Bed, Bath & Beyond Inc and other companies - on the back of Reddit memes and YouTube videos have put company leaders in a similar situation. Unlike Hertz, these companies are not under bankruptcy protection. So far, they are taking different approaches.
AMC did not respond to a request for comment. In late January, Chief Executive Adam Aron said recent fundraising meant “any talk of an imminent bankruptcy for AMC is completely off the table.”That was the dilemma Hertz faced last spring. The company filed for bankruptcy last May, crumbling under roughly US$19 billion of debt as the pandemic decimated its business.
Some Hertz directors saw an opportunity to bolster its cash coffers with a stock sale. But some in the management, along with other directors, pushed back over concerns the shares were virtually worthless and any offering would take advantage of small-time investors unfamiliar with bankruptcy law, the sources familiar with the discussions at the time said.
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