⚡️"Love Really Hertz Without You" - Billy Ocean⚡️
When we last discussed Hertz Global Holdings Inc. ($HTZGQ) ten days ago, the Hertz debtors were trying to push forward with approval of their proposed (i) disclosure statement and (ii) break-up fee and expense reimbursement accommodations for their “PE Sponsors,” Centerbridge Partners LP, Warburg Pincus LLC and Dundon Capital Partners LLC. But much like the “pesky kids” in Scooby-Doo, the debtors’ initial plan sponsors, Knighthead Capital Management LLC and Certares Management LLC, just had to — with the help of Apollo Global Management Inc. and active equityholders Glenview Capital Management LLC and Hein Park Capital Management LP — step in and f*ck everything up. At the 11th hour — on April 15, 2021, the night before a hearing to consider the above-noted relief — they came forward with an alternative proposal that threw the Hertz debtors’ plans for that hearing way off the tracks. And they found a sympathetic ear.
Judge Walrath was willing to play ball. Though she never heard the details of the new proposal (in fact specifically advising all parties not to delve into them), she agreed to kick the hearing — despite opposition from the Hertz debtors’ counsel — to April 21, 2021, to allow the Hertz debtors an earnest opportunity to weigh the two proposals against one another and ascertain whether the relief requested made sense under the new circumstances.
This, ladies and gentlemen, is the funny thing about bankruptcy. There are federal rules of bankruptcy; there are local rules of bankruptcy; there are judicial guidelines; there are Office of the United States Trustee guidelines; there are case procedures orders, etc. The process is chock full of rules and procedures. Sh*t. Putting aside that old federalism thing, the highest and best use case for a “local counsel” is simply having a safeguard against tripping up local jurisdictional rules. In other words, people make a lot of money just dancing around all these frikken rules.
And, yet, despite all of that — ALL … OF … THAT — if someone marches into a bankruptcy court with a massive trunk overflowing with green paper that’s backed by the full faith and credit of the United States of America, well, sh*t, all of those rules and procedures will fly out the window quicker than you can say “capitalism!” Ultimately, a debtor has an obligation — a fiduciary duty — to maximize value for the estate. Period.
And so that’s what the Hertz debtors did. In those five days, the Knighthead-Initial-Plan-Sponsor group further revised their proposal, compelling the boards of the Hertz debtors to conclude that they were for real. Indeed, they initially concluded, in furtherance of their requisite fiduciary duties, that the new proposal, maaaaaay very well constitute a superior offer.