Advantage Holdco Inc.

May 26, 2020

Florida-based Advantage Holdco Inc. (along with six affiliates, the “debtors”) is the second car rental business to file for chapter 11 bankruptcy in the last week. The debtors list at least $500mm in liabilities against $100mm-$500mm in assets. Rut roh. They also noted that “[a]fter any administrative expenses are paid, no funds will be available to unsecured creditors.” RUT ROH.

Get ready for the “private equity bros destroyed car rental” argument: Catalyst Capital Group Inc., a Toronto-based private equity firm, owns, through affiliates, 100% of the debtors’ equity after purchasing assets (from The Hertz Corporation as luck would have it) out of the 2014 Simply Wheelz LLC d/b/a Advantage Rent-a-Car bankruptcy and merging it with a subsequent acquisition of E-Z Rent-a-Car in 2015. As powerful as private equity firms tend to be, however, they, despite what some might think, didn’t conspire to shutdown the global economy. By extension, they didn’t have any hand in the pandemic stopping nearly all air travel — affecting, in turn, businesses like Advantage that depend on customers coming in and out of airports (much like Hertz). Nor did they have any control over people deciding not to go visit Las Vegas, Nevada — perhaps one of the gnarliest cities in the world — where Advantage also happens to have certain hotel partnerships it leverages to rent cars to people who want to say…blow sh*t up in the desert. Shocking we know! PE doesn’t control G-d.

Unlike Hertz, Advantage tends to target the leisure-discount segment of the rental car sector. Similar to Hertz, though, it generates predominantly all of its revenue from vehicle rentals (from airports mostly), ancillary products like insurance and navigation services and the wholesale disposition of automobiles previously used in the rental fleet. Sound familiar? Only so much room for creativity in this business model, broheims.

In 2019, the debtors did ~$271.5mm in revenue with $165.1mm attributable to rental and $106.4mm to the other stuff we previously noted. Which just goes to show how much of a money maker that bullsh*t insurance you always debate is.

There’s more bankruptcy Inception at play here: The Hertz Corporation ($HTZ) once owned this company but divested it to avoid antitrust scrutiny. Earlier this week, HTZ filed for bankruptcy. Not it is also involved in this bankruptcy; it is the debtors’ 11th largest general unsecured creditor. Whoops.

• Jurisdiction: D. of Delaware (Judge Dorsey)

• Capital Structure: $30.2mm unsecured loan (Aberdeen Standard Investments Inc.)

• Professionals:

  • Legal: Cole Schotz PC (Justin Alberto, Norman Pernick, Patrick Reilley, J. Kate Stickles)

  • Financial Advisor: Mackinac Partners (Matthew Pascucci)

  • Claims Agent: Epiq (*click on the link above for free docket access)

• Other Parties in Interest: