Hertz Global Holdings asked the court overseeing its Chapter 11 bankruptcy reorganization to authorize a stunning plan to raise $1 billion by selling 246.8 million new share
But don’t tell that to retail investors who have inexplicably piled into Hertz since its May 22 bankruptcy filing, driving up the share price from 56 cents to as high as $5.53 earlier this week. In after-hours trading last night the stock has shot up nearly 50% to $3.
Hertz is essentially saying that if morons are offering free money, why not take it? Bondholders will still end up taking over anyway. “Caveat emptor,” saysThe Art of Distressed M&A: Buying, Selling and Financing Troubled and Insolvent Companies There’s very little precedent for this kind of move, says Anapolsky, and long-running debate as to whether exchanges and regulators should allow shares of insolvent companies to continue trading in bankruptcy. Is it too much mothering to prevent companies from baiting naive millenials — on new day-trading platforms like Robinhood — into handing over free money?
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