On July 30, 2021 a
Exhibit,Appendix
was filed
involving a dispute between
Aristeia Capital L.L.C.,
Aurelius Capital Master Ltd.,
Benefit Street Partners L.L.C.,
Fortress Investment Group L.L.C.,
Lynstone Ssf Holdings S.A.R.L.,
Pandora Select Partners L.P.,
Strategic Value Master Fund Ltd.,
Strategic Value Special Situations Master Fund Iv, L.P.,
Tresidor Europe Credit Opportunities Limited,
Whirebox Multi-Strategy Partners, L.P.,
Whitebox Gt Fund, L.P.,
Whitebox Relative Value Partners L.P.,
and
Hertz Holdings Netherlands B.V.,
Hertz International Limited,
for Commercial Division
in the District Court of New York County.
Preview
FILED: NEW YORK COUNTY CLERK 11/18/2022 06:47 PM INDEX NO. 654710/2021
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THIS PROPOSED DISCLOSURE STATEMENT IS NOT A SOLICITATION OF
ACCEPTANCE OR REJECTION OF THE PLAN. ACCEPTANCES OR
REJECTIONS OF THE PLAN MAY NOT BE SOLICITED UNTIL A DISCLOSURE
STATEMENT HAS BEEN APPROVED BY THE BANKRUPTCY COURT. THE
DISCLOSURE STATEMENT IS BEING SUBMITTED FOR APPROVAL BUT HAS
NOT BEEN APPROVED BY THE BANKRUPTCY COURT TO DATE.
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re
Chapter 11
The Hertz Corporation, et al.,1 Case No. 20-11218 (MFW)
Debtors. (Jointly Administered)
DISCLOSURE STATEMENT FOR JOINT CHAPTER 11 PLAN OF REORGANIZATION
OF THE HERTZ CORPORATION AND ITS DEBTOR AFFILIATES
WHITE & CASE LLP RICHARDS, LAYTON & FINGER, P.A.
Thomas E Lauria (admitted pro hac vice) Mark D. Collins (No. 2981)
Matthew C. Brown (admitted pro hac vice) John H. Knight (No. 3848)
200 South Biscayne Boulevard, Suite 4900 Brett M. Haywood (No. 6166)
Miami, FL 33131 Christopher M. De Lillo (No. 6355)
Telephone: (305) 371-2700 J. Zach Noble (No. 6689)
One Rodney Square
J. Christopher Shore (admitted pro hac vice)
910 N. King Street
David M. Turetsky (admitted pro hac vice)
Wilmington, Delaware 19801
Andrew T. Zatz (admitted pro hac vice)
Telephone: (302) 651-7700
Andrea Amulic (admitted pro hac vice)
1221 Avenue of the Americas
New York, NY 10020
Telephone: (212) 819-8200
Jason N. Zakia (admitted pro hac vice)
111 South Wacker Drive
1
The last four digits of The Hertz Corporation’s tax identification number are 8568. The location
of the debtors’ service address is 8501 Williams Road, Estero, FL 33928. Due to the large number of
debtors in these chapter 11 cases, which are jointly administered for procedural purposes only, a complete
list of the debtors and the last four digits of their federal tax identification numbers is not provided herein. A
complete list of such information may be obtained on the website of the debtors’ claims and noticing agent
at https://restructuring.primeclerk.com/hertz.
AMERICAS 106663920
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Chicago, IL 60606
Telephone: (312) 881-5400
Roberto J. Kampfner (admitted pro hac vice)
Ronald K. Gorsich (admitted pro hac vice)
Aaron Colodny (admitted pro hac vice)
Andrew Mackintosh (admitted pro hac vice)
Doah Kim (admitted pro hac vice)
555 South Flower Street, Suite 2700
Los Angeles, CA 90071
Telephone: (213) 620-7700
Attorneys for the Debtors and Debtors in Possession
Dated: March 1, 2021
2
AMERICAS 106663920
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Table of Contents
Page
I. INTRODUCTION ...................................................................................................... 1
A. Definitions and Exhibits ................................................................................... 1
1. Definitions ........................................................................................................ 1
2. Exhibits ............................................................................................................. 1
B. Notice to Creditors ............................................................................................ 1
C. Background and Overview of the Plan ............................................................. 5
D. PSA & Commitment Letter ............................................................................ 11
E. The Plan Sponsors........................................................................................... 11
F. Disclosure Statement Enclosures .................................................................... 12
G. Inquiries .......................................................................................................... 12
II. OVERVIEW OF THE COMPANY’S OPERATIONS ......................................... 13
A. The Company’s Prepetition Business Operations........................................... 13
B. The Company’s Corporate Structure .............................................................. 14
C. The Company’s Prepetition Capital Structure ................................................ 15
1. Equity .............................................................................................................. 15
2. Financial Debt ................................................................................................. 15
3. Intercompany Obligations ............................................................................... 26
4. Trade Debt and Other Liabilities Relating to Operations ............................... 27
D. Events Leading to the Commencement of the Chapter 11 Cases ................... 27
III. OVERVIEW OF THE CHAPTER 11 CASES ...................................................... 31
A. Commencement of Chapter 11 Cases ............................................................. 31
B. First Day Motions ........................................................................................... 31
C. Procedural Motions and Applications ............................................................. 31
D. Retention of Chapter 11 Professionals ............................................................ 32
E. Appointment of Creditors Committee ............................................................ 32
F. Statements and Schedules, Rule 2015.3 Financial Reports, and Claims Bar
Dates ............................................................................................................... 33
G. Use of Certain Asserted Cash Collateral and Related Adequate Protection ... 34
H. Equity Sale ...................................................................................................... 34
I. Repayment in Full of the U.S. Vehicle RCF (or, Sidecar Facility) ................ 35
J. Exclusivity ...................................................................................................... 35
K. Executory Contracts and Unexpired Leases ................................................... 35
1. The Rejections ................................................................................................ 36
2. The Assumptions ............................................................................................ 37
L. Key Employee Incentive Programs ................................................................ 40
M. Prepetition Litigation ...................................................................................... 41
1. The False Police Report Plaintiffs Cases ........................................................ 41
2. Prepetition Representative Actions and Related Mediation............................ 42
3. Certain Prepetition Causes of Action of the Debtors ...................................... 50
N. Alternative Dispute Resolution Procedures .................................................... 52
i
AMERICAS 106663920
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Table of Contents
Page
O. Litigation Regarding the Prepetition HVF II ABS Program Master Lease
Agreement ....................................................................................................... 52
P. Temporary Suspension of Sales at Hertz Car Sales Locations ....................... 53
Q. Debtor-In-Possession Financing ..................................................................... 53
R. Post-Petition Donlen Asset-Based Securitization Facility .............................. 54
S. Canadian Asset-Based Securitization Facility ................................................ 54
T. Interim Asset-Based Securitization Facility ................................................... 55
U. Sale of Substantially All of the Assets of Donlen Corp. and Its Debtor
Subsidiaries ..................................................................................................... 55
V. Efforts to Restructure Non-U.S. Debt ............................................................. 56
W. Lombard Vehicle Financing Facility & European ABS Facility Waivers ..... 58
X. Committee’s Adversary Proceeding ............................................................... 58
Y. Diligence to the Committee and Other Stakeholders ...................................... 59
IV. SUMMARY OF THE PLAN ................................................................................... 60
A. General ............................................................................................................ 60
B. Administrative Claims and Priority Claims .................................................... 60
1. Administrative Claims .................................................................................... 61
2. DIP Claims ...................................................................................................... 62
3. HVF Master Lease Administrative Claims ..................................................... 62
4. Postpetition Fleet Financing Administrative Claims ...................................... 62
5. Professional Fee Claims .................................................................................. 63
6. Priority Tax Claims ......................................................................................... 64
C. Classification of Claims and Interests............................................................. 64
1. Classification in General ................................................................................. 64
2. Summary of Classification .............................................................................. 64
3. Class Identification ......................................................................................... 65
4. Treatment of Claims and Interests .................................................................. 66
5. Special Provision Governing Unimpaired Claims .......................................... 72
6. Confirmation Pursuant to Sections 1129(a)(10) and 1129(b) of the
Bankruptcy Code ............................................................................................ 72
7. Elimination of Vacant Classes ........................................................................ 72
8. Separate Classification of Other Secured Claims ........................................... 72
9. Voting Classes; Presumed Acceptance by Non-Voting Classes ..................... 72
10. Controversy Concerning Impairment.............................................................. 73
D. Means for Implementation of the Plan............................................................ 73
1. No Substantive Consolidation......................................................................... 73
2. Restructuring Transactions; Effectuating Documents .................................... 73
3. Sources of Consideration for Plan Distributions............................................. 74
4. New Money Investment .................................................................................. 74
5. Issuance and Distribution of Reorganized Hertz Parent Interests ................... 75
6. New Reorganized Debt ................................................................................... 75
ii
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7. Replacement of First Lien Letters of Credit ................................................... 76
8. HVF II and Interim Fleet Financing Settlement ............................................. 76
9. HVF III Fleet Financing.................................................................................. 77
10. General Unsecured Claim and General Unsecured Elective Claim
Recoveries ....................................................................................................... 77
11. Intercompany Claim Settlement ..................................................................... 78
12. HHN Restructuring ......................................................................................... 78
13. International Vehicle Financing Claims ......................................................... 78
14. Corporate Existence ........................................................................................ 79
15. Vesting of Assets in the Reorganized Debtors................................................ 79
16. Cancellation of Existing Securities ................................................................. 79
17. Corporate Action............................................................................................. 81
18. New Organizational Documents ..................................................................... 82
19. Reorganized Hertz Parent and Reorganized Hertz Corp. Board ..................... 82
20. Exemption from Certain Taxes and Fees ........................................................ 83
21. Preservation of Causes of Action .................................................................... 83
22. Insurance Policies and Surety Bonds .............................................................. 84
23. Management Equity Incentive Plan ................................................................ 86
24. Employee Obligations ..................................................................................... 86
25. Defined Benefit Qualified Pension Plans of Hertz and Non-Debtor
Affiliate Puerto Ricancars, Inc. ....................................................................... 87
26. Workers’ Compensation Programs ................................................................. 89
27. Collective Bargaining Agreements ................................................................. 89
E. Treatment of Executory Contracts and Unexpired Leases ............................. 89
1. Assumption and Rejection of Executory Contracts and Unexpired
Leases.............................................................................................................. 89
2. Claims Based on Rejection of Executory Contracts or Unexpired
Leases.............................................................................................................. 90
3. Cure of Defaults for Assumed Executory Contracts and Unexpired
Leases.............................................................................................................. 91
4. Assumption Dispute Resolution ..................................................................... 92
5. Indemnification Obligations ........................................................................... 93
6. Contracts and Leases Entered into After the Petition Date ............................. 93
7. Modifications, Amendments, Supplements, Restatements, or Other
Agreements ..................................................................................................... 93
8. Reservation of Rights ...................................................................................... 93
9. Nonoccurrence of Effective Date; Bankruptcy Code Section 365(d)(4) ........ 94
F. Provisions Governing Distributions................................................................ 94
1. Timing and Calculation of Amounts to Be Distributed .................................. 94
2. Special Rules for Distributions to Holders of Disputed Claims and
Interests ........................................................................................................... 94
3. Rights and Powers of Distribution Agent ....................................................... 95
iii
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4. Delivery of Distributions and Undeliverable or Unclaimed
Distributions.................................................................................................... 95
5. Securities Registration Exemption .................................................................. 99
6. Compliance with Tax Requirements ............................................................. 100
7. Allocations .................................................................................................... 101
8. No Postpetition or Default Interest on Claims .............................................. 101
9. Setoffs and Recoupment ............................................................................... 101
10. Claims Paid or Payable by Third Parties ...................................................... 101
G. Procedures for Resolving Contingent, Unliquidated, and Disputed Claims . 102
1. Allowance of Claims..................................................................................... 102
2. Claims and Interests Administration Responsibilities .................................. 102
3. ADR Procedures ........................................................................................... 102
4. Estimation of Claims..................................................................................... 103
5. Adjustment to Claims Register Without Objection ...................................... 103
6. Time to File Objections to Claims ................................................................ 104
7. Disallowance of Claims ................................................................................ 104
8. Amendments to Proofs of Claims ................................................................. 104
9. Reimbursement or Contribution ................................................................... 104
10. No Distributions Pending Allowance ........................................................... 105
11. Distributions After Allowance ...................................................................... 105
12. Single Satisfaction of Claims ........................................................................ 105
H. Settlement, Release, Injunction, and Related Provisions .............................. 105
1. Compromise and Settlement of Claims, Interests, and Controversies .......... 105
2. Discharge of Claims and Termination of Interests ....................................... 106
3. Releases by the Debtors ................................................................................ 106
4. Releases by Holders of Claims and Interests ................................................ 107
5. Exculpation ................................................................................................... 109
6. Injunction ...................................................................................................... 110
7. Subordination Rights .................................................................................... 111
8. Release of Liens ............................................................................................ 112
I. Conditions Precedent to Consummation of the Plan .................................... 112
1. Conditions Precedent to the Effective Date .................................................. 112
2. Waiver of Conditions .................................................................................... 114
3. Substantial Consummation ........................................................................... 114
4. Committee Complaint ................................................................................... 114
5. Effect of Non-Occurrence of Conditions to the Effective Date .................... 114
J. Modification, Revocation, or Withdrawal of the Plan .................................. 114
1. Modification and Amendments..................................................................... 114
2. Effect of Confirmation on Modifications...................................................... 115
3. Effect of Confirmation .................................................................................. 115
4. Revocation or Withdrawal of the Plan .......................................................... 115
K. Retention of Jurisdiction ............................................................................... 115
iv
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L. Miscellaneous Provisions.............................................................................. 118
1. Immediate Binding Effect ............................................................................. 118
2. Additional Documents .................................................................................. 118
3. Payment of Statutory Fees ............................................................................ 118
4. Reservation of Rights .................................................................................... 118
5. Transaction Expenses.................................................................................... 119
6. Successors and Assigns................................................................................. 119
7. Service of Documents ................................................................................... 119
8. Term of Injunctions or Stays......................................................................... 120
9. Entire Agreement .......................................................................................... 120
10. Nonseverability of Plan Provisions ............................................................... 121
11. Dissolution of Committee ............................................................................. 121
12. Expedited Tax Determination ....................................................................... 121
13. Computation of Time .................................................................................... 121
14. Governing Law ............................................................................................. 121
15. Reference to Monetary Figures ..................................................................... 122
16. Reference to the Debtors or the Reorganized Debtors .................................. 122
17. Controlling Document .................................................................................. 122
V. ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE
PLAN........................................................................................................................ 122
A. Continuation of the Chapter 11 Cases .......................................................... 122
B. Liquidation under Chapter 7 ......................................................................... 123
VI. TRANSFER RESTRICTIONS AND CONSEQUENCES UNDER FEDERAL
SECURITIES LAW ................................................................................................ 123
A. Section 1145 Securities ................................................................................. 123
B. Private Placement.......................................................................................... 124
C. Restrictions on Rights Offering Participants and on Transfer ...................... 127
VII. CERTAIN TAX CONSEQUENCES OF THE PLAN......................................... 127
A. Consequences to the Debtors ........................................................................ 128
1. Cancellation of Debt ..................................................................................... 128
2. Limitation of NOL Carryforwards and Other Tax Attributes ....................... 129
B. Consequences to Holders of Certain Claims ................................................ 130
1. Holders of Class 5 – Unsecured Funded Debt Claims .................................. 131
2. Holders of Classes 6 and 7 – General Unsecured Claims and General
Unsecured Elective Claims ........................................................................... 132
C. Character of Gain or Loss ............................................................................. 132
D. Distributions in Discharge of Accrued Interest or OID ................................ 133
E. Information Reporting and Backup Withholding ......................................... 133
VIII. SOLICITATION AND VOTING PROCEDURES ............................................. 134
A. Holders of Claims Entitled to Vote on the Plan............................................ 134
B. Solicitation Package ...................................................................................... 135
v
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C. Voting Record Date ...................................................................................... 136
D. Voting on the Plan ........................................................................................ 136
E. Ballots Not Counted...................................................................................... 137
IX. FACTORS TO CONSIDER BEFORE VOTING ................................................ 138
A. Risks Relating to the Debtors’ Business Operations and Financial Condition
....................................................................................................................... 138
1. Continued Disruptions Caused by the COVID-19 Outbreak ........................ 138
2. Reductions in Levels of Business and Leisure Travel .................................. 139
3. Competition .................................................................................................. 140
4. Seasonal Nature of Business ......................................................................... 140
5. Increased Vehicle Cost ................................................................................. 140
6. Environmental Laws and Regulations .......................................................... 141
7. Union-Represented Employees ..................................................................... 142
B. Certain Bankruptcy Law Considerations ...................................................... 142
1. Risk of Non-Confirmation of the Plan .......................................................... 142
2. Non-Consensual Confirmation ..................................................................... 142
3. Financial Projections ..................................................................................... 142
4. Allowed Claims Could Exceed Estimates .................................................... 143
5. U.S. Federal Income Tax Risks .................................................................... 143
6. Risk of Non-Occurrence of the Effective Date ............................................. 143
7. Conversion into Chapter 7 Cases .................................................................. 144
8. Parties in Interest May Object to the Plan’s Classification of Claims
and Interests .................................................................................................. 144
9. The Debtors May Fail to Satisfy Vote Requirements ................................... 144
10. Continued Risk Upon Confirmation ............................................................. 144
11. The Debtors May Object to the Amount or Classification of a Claim .......... 145
12. Contingencies Could Affect Votes of Impaired Classes to Accept or
Reject the Plan .............................................................................................. 145
13. Releases, Injunctions, and Exculpations Provisions May Not Be
Approved ...................................................................................................... 145
C. Factors Relating to Securities to Be Issued................................................... 145
1. Significant Holders of Reorganized Hertz Parent Interests .......................... 145
2. Interests Subordinated to the Reorganized Debtors’ Indebtedness ............... 146
3. Dividends ...................................................................................................... 146
4. Restricted Securities Issued under the Plan May Not Be Resold or
Otherwise Transferred Unless They Are Registered Under the
Securities Act or an Exemption from Registration Applies .......................... 146
D. Factors Relating to the Rights Offering ........................................................ 147
E. Additional Factors......................................................................................... 149
5. Debtors Could Withdraw the Plan ................................................................ 149
6. Debtors Have No Duty to Update ................................................................. 149
7. No Representations Outside this Disclosure Statement Are Authorized ...... 149
vi
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8. No Legal or Tax Advice Is Provided by this Disclosure Statement ............. 149
9. No Admission Made ..................................................................................... 150
X. CONFIRMATION OF THE PLAN ...................................................................... 150
A. Acceptance of the Plan.................................................................................. 150
B. Best Interests Test ......................................................................................... 151
C. Feasibility...................................................................................................... 151
D. Notices and Confirmation Hearing ............................................................... 151
XI. CONCLUSION AND RECOMMENDATION .................................................... 154
EXHIBIT A: Plan
EXHIBIT B: Plan Support Agreement
EXHIBIT C: List of Debtors
EXHIBIT D: Debtors’ Organizational Structure
EXHIBIT E: Financial Projections
EXHIBIT F: Liquidation Analysis
EXHIBIT G: [RESERVED]
EXHIBIT H: Exit Term Loan Facility Term Sheet
EXHIBIT I: Exit Revolving Credit Facility Term Sheet
vii
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RECEIVED NYSCEF: 11/18/2022
I.
INTRODUCTION
This is the disclosure statement (the “Disclosure Statement”) of The Hertz Corporation (“Hertz
Corp.”) and its debtor affiliates (collectively, the “Debtors” and, together with their non-Debtor
affiliates, the “Company”), in the above-captioned chapter 11 cases (collectively, the “Chapter
11 Cases”) pending in the United States Bankruptcy Court for the District of Delaware (the
“Bankruptcy Court”), filed pursuant to section 1125 of title 11 of the United States Code (the
“Bankruptcy Code”) and in connection with the Joint Chapter 11 Plan of Reorganization of The
Hertz Corporation and Its Debtor Affiliates dated March 1, 2021 (the “Plan”), a copy of which is
annexed to this Disclosure Statement as Exhibit A. The Plan constitutes a separate chapter 11
plan for each Debtor.
A. Definitions and Exhibits
1. Definitions
Unless otherwise defined herein, capitalized terms used in this Disclosure Statement shall have the
meanings ascribed to such terms in the Plan or as the context otherwise requir
Document Filed Date
November 18, 2022
Case Filing Date
July 30, 2021
Category
Commercial Division
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FILED: NEW YORK COUNTY CLERK 11/18/2022 06:47 PM INDEX NO. 654710/2021 NYSCEF DOC. NO. 94 Case 20-11218-MFW Doc 2913 Filed 03/02/21 Page RECEIVED 1 of 163 NYSCEF: 11/18/2022 THIS PROPOSED DISCLOSURE STATEMENT IS NOT A SOLICITATION OF ACCEPTANCE OR REJECTION OF THE PLAN. ACCEPTANCES OR REJECTIONS OF THE PLAN MAY NOT BE SOLICITED UNTIL A DISCLOSURE STATEMENT HAS BEEN APPROVED BY THE BANKRUPTCY COURT. THE DISCLOSURE STATEMENT IS BEING SUBMITTED FOR APPROVAL BUT HAS NOT BEEN APPROVED BY THE BANKRUPTCY COURT TO DATE. IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re Chapter 11 The Hertz Corporation, et al.,1 Case No. 20-11218 (MFW) Debtors. (Jointly Administered) DISCLOSURE STATEMENT FOR JOINT CHAPTER 11 PLAN OF REORGANIZATION OF THE HERTZ CORPORATION AND ITS DEBTOR AFFILIATES WHITE & CASE LLP RICHARDS, LAYTON & FINGER, P.A. Thomas E Lauria (admitted pro hac vice) Mark D. Collins (No. 2981) Matthew C. Brown (admitted pro hac vice) John H. Knight (No. 3848) 200 South Biscayne Boulevard, Suite 4900 Brett M. Haywood (No. 6166) Miami, FL 33131 Christopher M. De Lillo (No. 6355) Telephone: (305) 371-2700 J. Zach Noble (No. 6689) One Rodney Square J. Christopher Shore (admitted pro hac vice) 910 N. King Street David M. Turetsky (admitted pro hac vice) Wilmington, Delaware 19801 Andrew T. Zatz (admitted pro hac vice) Telephone: (302) 651-7700 Andrea Amulic (admitted pro hac vice) 1221 Avenue of the Americas New York, NY 10020 Telephone: (212) 819-8200 Jason N. Zakia (admitted pro hac vice) 111 South Wacker Drive 1 The last four digits of The Hertz Corporation’s tax identification number are 8568. The location of the debtors’ service address is 8501 Williams Road, Estero, FL 33928. Due to the large number of debtors in these chapter 11 cases, which are jointly administered for procedural purposes only, a complete list of the debtors and the last four digits of their federal tax identification numbers is not provided herein. A complete list of such information may be obtained on the website of the debtors’ claims and noticing agent at https://restructuring.primeclerk.com/hertz. AMERICAS 106663920 FILED: NEW YORK COUNTY CLERK 11/18/2022 06:47 PM INDEX NO. 654710/2021 NYSCEF DOC. NO. 94 Case 20-11218-MFW Doc 2913 Filed 03/02/21 Page RECEIVED 2 of 163 NYSCEF: 11/18/2022 Chicago, IL 60606 Telephone: (312) 881-5400 Roberto J. Kampfner (admitted pro hac vice) Ronald K. Gorsich (admitted pro hac vice) Aaron Colodny (admitted pro hac vice) Andrew Mackintosh (admitted pro hac vice) Doah Kim (admitted pro hac vice) 555 South Flower Street, Suite 2700 Los Angeles, CA 90071 Telephone: (213) 620-7700 Attorneys for the Debtors and Debtors in Possession Dated: March 1, 2021 2 AMERICAS 106663920 FILED: NEW YORK COUNTY CLERK 11/18/2022 06:47 PM INDEX NO. 654710/2021 NYSCEF DOC. NO. 94 Case 20-11218-MFW Doc 2913 Filed 03/02/21 Page RECEIVED 3 of 163 NYSCEF: 11/18/2022 Table of Contents Page I. INTRODUCTION ...................................................................................................... 1 A. Definitions and Exhibits ................................................................................... 1 1. Definitions ........................................................................................................ 1 2. Exhibits ............................................................................................................. 1 B. Notice to Creditors ............................................................................................ 1 C. Background and Overview of the Plan ............................................................. 5 D. PSA & Commitment Letter ............................................................................ 11 E. The Plan Sponsors........................................................................................... 11 F. Disclosure Statement Enclosures .................................................................... 12 G. Inquiries .......................................................................................................... 12 II. OVERVIEW OF THE COMPANY’S OPERATIONS ......................................... 13 A. The Company’s Prepetition Business Operations........................................... 13 B. The Company’s Corporate Structure .............................................................. 14 C. The Company’s Prepetition Capital Structure ................................................ 15 1. Equity .............................................................................................................. 15 2. Financial Debt ................................................................................................. 15 3. Intercompany Obligations ............................................................................... 26 4. Trade Debt and Other Liabilities Relating to Operations ............................... 27 D. Events Leading to the Commencement of the Chapter 11 Cases ................... 27 III. OVERVIEW OF THE CHAPTER 11 CASES ...................................................... 31 A. Commencement of Chapter 11 Cases ............................................................. 31 B. First Day Motions ........................................................................................... 31 C. Procedural Motions and Applications ............................................................. 31 D. Retention of Chapter 11 Professionals ............................................................ 32 E. Appointment of Creditors Committee ............................................................ 32 F. Statements and Schedules, Rule 2015.3 Financial Reports, and Claims Bar Dates ............................................................................................................... 33 G. Use of Certain Asserted Cash Collateral and Related Adequate Protection ... 34 H. Equity Sale ...................................................................................................... 34 I. Repayment in Full of the U.S. Vehicle RCF (or, Sidecar Facility) ................ 35 J. Exclusivity ...................................................................................................... 35 K. Executory Contracts and Unexpired Leases ................................................... 35 1. The Rejections ................................................................................................ 36 2. The Assumptions ............................................................................................ 37 L. Key Employee Incentive Programs ................................................................ 40 M. Prepetition Litigation ...................................................................................... 41 1. The False Police Report Plaintiffs Cases ........................................................ 41 2. Prepetition Representative Actions and Related Mediation............................ 42 3. Certain Prepetition Causes of Action of the Debtors ...................................... 50 N. Alternative Dispute Resolution Procedures .................................................... 52 i AMERICAS 106663920 FILED: NEW YORK COUNTY CLERK 11/18/2022 06:47 PM INDEX NO. 654710/2021 NYSCEF DOC. NO. 94 Case 20-11218-MFW Doc 2913 Filed 03/02/21 Page RECEIVED 4 of 163 NYSCEF: 11/18/2022 Table of Contents Page O. Litigation Regarding the Prepetition HVF II ABS Program Master Lease Agreement ....................................................................................................... 52 P. Temporary Suspension of Sales at Hertz Car Sales Locations ....................... 53 Q. Debtor-In-Possession Financing ..................................................................... 53 R. Post-Petition Donlen Asset-Based Securitization Facility .............................. 54 S. Canadian Asset-Based Securitization Facility ................................................ 54 T. Interim Asset-Based Securitization Facility ................................................... 55 U. Sale of Substantially All of the Assets of Donlen Corp. and Its Debtor Subsidiaries ..................................................................................................... 55 V. Efforts to Restructure Non-U.S. Debt ............................................................. 56 W. Lombard Vehicle Financing Facility & European ABS Facility Waivers ..... 58 X. Committee’s Adversary Proceeding ............................................................... 58 Y. Diligence to the Committee and Other Stakeholders ...................................... 59 IV. SUMMARY OF THE PLAN ................................................................................... 60 A. General ............................................................................................................ 60 B. Administrative Claims and Priority Claims .................................................... 60 1. Administrative Claims .................................................................................... 61 2. DIP Claims ...................................................................................................... 62 3. HVF Master Lease Administrative Claims ..................................................... 62 4. Postpetition Fleet Financing Administrative Claims ...................................... 62 5. Professional Fee Claims .................................................................................. 63 6. Priority Tax Claims ......................................................................................... 64 C. Classification of Claims and Interests............................................................. 64 1. Classification in General ................................................................................. 64 2. Summary of Classification .............................................................................. 64 3. Class Identification ......................................................................................... 65 4. Treatment of Claims and Interests .................................................................. 66 5. Special Provision Governing Unimpaired Claims .......................................... 72 6. Confirmation Pursuant to Sections 1129(a)(10) and 1129(b) of the Bankruptcy Code ............................................................................................ 72 7. Elimination of Vacant Classes ........................................................................ 72 8. Separate Classification of Other Secured Claims ........................................... 72 9. Voting Classes; Presumed Acceptance by Non-Voting Classes ..................... 72 10. Controversy Concerning Impairment.............................................................. 73 D. Means for Implementation of the Plan............................................................ 73 1. No Substantive Consolidation......................................................................... 73 2. Restructuring Transactions; Effectuating Documents .................................... 73 3. Sources of Consideration for Plan Distributions............................................. 74 4. New Money Investment .................................................................................. 74 5. Issuance and Distribution of Reorganized Hertz Parent Interests ................... 75 6. New Reorganized Debt ................................................................................... 75 ii AMERICAS 106663920 FILED: NEW YORK COUNTY CLERK 11/18/2022 06:47 PM INDEX NO. 654710/2021 NYSCEF DOC. NO. 94 Case 20-11218-MFW Doc 2913 Filed 03/02/21 Page RECEIVED 5 of 163 NYSCEF: 11/18/2022 Table of Contents Page 7. Replacement of First Lien Letters of Credit ................................................... 76 8. HVF II and Interim Fleet Financing Settlement ............................................. 76 9. HVF III Fleet Financing.................................................................................. 77 10. General Unsecured Claim and General Unsecured Elective Claim Recoveries ....................................................................................................... 77 11. Intercompany Claim Settlement ..................................................................... 78 12. HHN Restructuring ......................................................................................... 78 13. International Vehicle Financing Claims ......................................................... 78 14. Corporate Existence ........................................................................................ 79 15. Vesting of Assets in the Reorganized Debtors................................................ 79 16. Cancellation of Existing Securities ................................................................. 79 17. Corporate Action............................................................................................. 81 18. New Organizational Documents ..................................................................... 82 19. Reorganized Hertz Parent and Reorganized Hertz Corp. Board ..................... 82 20. Exemption from Certain Taxes and Fees ........................................................ 83 21. Preservation of Causes of Action .................................................................... 83 22. Insurance Policies and Surety Bonds .............................................................. 84 23. Management Equity Incentive Plan ................................................................ 86 24. Employee Obligations ..................................................................................... 86 25. Defined Benefit Qualified Pension Plans of Hertz and Non-Debtor Affiliate Puerto Ricancars, Inc. ....................................................................... 87 26. Workers’ Compensation Programs ................................................................. 89 27. Collective Bargaining Agreements ................................................................. 89 E. Treatment of Executory Contracts and Unexpired Leases ............................. 89 1. Assumption and Rejection of Executory Contracts and Unexpired Leases.............................................................................................................. 89 2. Claims Based on Rejection of Executory Contracts or Unexpired Leases.............................................................................................................. 90 3. Cure of Defaults for Assumed Executory Contracts and Unexpired Leases.............................................................................................................. 91 4. Assumption Dispute Resolution ..................................................................... 92 5. Indemnification Obligations ........................................................................... 93 6. Contracts and Leases Entered into After the Petition Date ............................. 93 7. Modifications, Amendments, Supplements, Restatements, or Other Agreements ..................................................................................................... 93 8. Reservation of Rights ...................................................................................... 93 9. Nonoccurrence of Effective Date; Bankruptcy Code Section 365(d)(4) ........ 94 F. Provisions Governing Distributions................................................................ 94 1. Timing and Calculation of Amounts to Be Distributed .................................. 94 2. Special Rules for Distributions to Holders of Disputed Claims and Interests ........................................................................................................... 94 3. Rights and Powers of Distribution Agent ....................................................... 95 iii AMERICAS 106663920 FILED: NEW YORK COUNTY CLERK 11/18/2022 06:47 PM INDEX NO. 654710/2021 NYSCEF DOC. NO. 94 Case 20-11218-MFW Doc 2913 Filed 03/02/21 Page RECEIVED 6 of 163 NYSCEF: 11/18/2022 Table of Contents Page 4. Delivery of Distributions and Undeliverable or Unclaimed Distributions.................................................................................................... 95 5. Securities Registration Exemption .................................................................. 99 6. Compliance with Tax Requirements ............................................................. 100 7. Allocations .................................................................................................... 101 8. No Postpetition or Default Interest on Claims .............................................. 101 9. Setoffs and Recoupment ............................................................................... 101 10. Claims Paid or Payable by Third Parties ...................................................... 101 G. Procedures for Resolving Contingent, Unliquidated, and Disputed Claims . 102 1. Allowance of Claims..................................................................................... 102 2. Claims and Interests Administration Responsibilities .................................. 102 3. ADR Procedures ........................................................................................... 102 4. Estimation of Claims..................................................................................... 103 5. Adjustment to Claims Register Without Objection ...................................... 103 6. Time to File Objections to Claims ................................................................ 104 7. Disallowance of Claims ................................................................................ 104 8. Amendments to Proofs of Claims ................................................................. 104 9. Reimbursement or Contribution ................................................................... 104 10. No Distributions Pending Allowance ........................................................... 105 11. Distributions After Allowance ...................................................................... 105 12. Single Satisfaction of Claims ........................................................................ 105 H. Settlement, Release, Injunction, and Related Provisions .............................. 105 1. Compromise and Settlement of Claims, Interests, and Controversies .......... 105 2. Discharge of Claims and Termination of Interests ....................................... 106 3. Releases by the Debtors ................................................................................ 106 4. Releases by Holders of Claims and Interests ................................................ 107 5. Exculpation ................................................................................................... 109 6. Injunction ...................................................................................................... 110 7. Subordination Rights .................................................................................... 111 8. Release of Liens ............................................................................................ 112 I. Conditions Precedent to Consummation of the Plan .................................... 112 1. Conditions Precedent to the Effective Date .................................................. 112 2. Waiver of Conditions .................................................................................... 114 3. Substantial Consummation ........................................................................... 114 4. Committee Complaint ................................................................................... 114 5. Effect of Non-Occurrence of Conditions to the Effective Date .................... 114 J. Modification, Revocation, or Withdrawal of the Plan .................................. 114 1. Modification and Amendments..................................................................... 114 2. Effect of Confirmation on Modifications...................................................... 115 3. Effect of Confirmation .................................................................................. 115 4. Revocation or Withdrawal of the Plan .......................................................... 115 K. Retention of Jurisdiction ............................................................................... 115 iv AMERICAS 106663920 FILED: NEW YORK COUNTY CLERK 11/18/2022 06:47 PM INDEX NO. 654710/2021 NYSCEF DOC. NO. 94 Case 20-11218-MFW Doc 2913 Filed 03/02/21 Page RECEIVED 7 of 163 NYSCEF: 11/18/2022 Table of Contents Page L. Miscellaneous Provisions.............................................................................. 118 1. Immediate Binding Effect ............................................................................. 118 2. Additional Documents .................................................................................. 118 3. Payment of Statutory Fees ............................................................................ 118 4. Reservation of Rights .................................................................................... 118 5. Transaction Expenses.................................................................................... 119 6. Successors and Assigns................................................................................. 119 7. Service of Documents ................................................................................... 119 8. Term of Injunctions or Stays......................................................................... 120 9. Entire Agreement .......................................................................................... 120 10. Nonseverability of Plan Provisions ............................................................... 121 11. Dissolution of Committee ............................................................................. 121 12. Expedited Tax Determination ....................................................................... 121 13. Computation of Time .................................................................................... 121 14. Governing Law ............................................................................................. 121 15. Reference to Monetary Figures ..................................................................... 122 16. Reference to the Debtors or the Reorganized Debtors .................................. 122 17. Controlling Document .................................................................................. 122 V. ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN........................................................................................................................ 122 A. Continuation of the Chapter 11 Cases .......................................................... 122 B. Liquidation under Chapter 7 ......................................................................... 123 VI. TRANSFER RESTRICTIONS AND CONSEQUENCES UNDER FEDERAL SECURITIES LAW ................................................................................................ 123 A. Section 1145 Securities ................................................................................. 123 B. Private Placement.......................................................................................... 124 C. Restrictions on Rights Offering Participants and on Transfer ...................... 127 VII. CERTAIN TAX CONSEQUENCES OF THE PLAN......................................... 127 A. Consequences to the Debtors ........................................................................ 128 1. Cancellation of Debt ..................................................................................... 128 2. Limitation of NOL Carryforwards and Other Tax Attributes ....................... 129 B. Consequences to Holders of Certain Claims ................................................ 130 1. Holders of Class 5 – Unsecured Funded Debt Claims .................................. 131 2. Holders of Classes 6 and 7 – General Unsecured Claims and General Unsecured Elective Claims ........................................................................... 132 C. Character of Gain or Loss ............................................................................. 132 D. Distributions in Discharge of Accrued Interest or OID ................................ 133 E. Information Reporting and Backup Withholding ......................................... 133 VIII. SOLICITATION AND VOTING PROCEDURES ............................................. 134 A. Holders of Claims Entitled to Vote on the Plan............................................ 134 B. Solicitation Package ...................................................................................... 135 v AMERICAS 106663920 FILED: NEW YORK COUNTY CLERK 11/18/2022 06:47 PM INDEX NO. 654710/2021 NYSCEF DOC. NO. 94 Case 20-11218-MFW Doc 2913 Filed 03/02/21 Page RECEIVED 8 of 163 NYSCEF: 11/18/2022 Table of Contents Page C. Voting Record Date ...................................................................................... 136 D. Voting on the Plan ........................................................................................ 136 E. Ballots Not Counted...................................................................................... 137 IX. FACTORS TO CONSIDER BEFORE VOTING ................................................ 138 A. Risks Relating to the Debtors’ Business Operations and Financial Condition ....................................................................................................................... 138 1. Continued Disruptions Caused by the COVID-19 Outbreak ........................ 138 2. Reductions in Levels of Business and Leisure Travel .................................. 139 3. Competition .................................................................................................. 140 4. Seasonal Nature of Business ......................................................................... 140 5. Increased Vehicle Cost ................................................................................. 140 6. Environmental Laws and Regulations .......................................................... 141 7. Union-Represented Employees ..................................................................... 142 B. Certain Bankruptcy Law Considerations ...................................................... 142 1. Risk of Non-Confirmation of the Plan .......................................................... 142 2. Non-Consensual Confirmation ..................................................................... 142 3. Financial Projections ..................................................................................... 142 4. Allowed Claims Could Exceed Estimates .................................................... 143 5. U.S. Federal Income Tax Risks .................................................................... 143 6. Risk of Non-Occurrence of the Effective Date ............................................. 143 7. Conversion into Chapter 7 Cases .................................................................. 144 8. Parties in Interest May Object to the Plan’s Classification of Claims and Interests .................................................................................................. 144 9. The Debtors May Fail to Satisfy Vote Requirements ................................... 144 10. Continued Risk Upon Confirmation ............................................................. 144 11. The Debtors May Object to the Amount or Classification of a Claim .......... 145 12. Contingencies Could Affect Votes of Impaired Classes to Accept or Reject the Plan .............................................................................................. 145 13. Releases, Injunctions, and Exculpations Provisions May Not Be Approved ...................................................................................................... 145 C. Factors Relating to Securities to Be Issued................................................... 145 1. Significant Holders of Reorganized Hertz Parent Interests .......................... 145 2. Interests Subordinated to the Reorganized Debtors’ Indebtedness ............... 146 3. Dividends ...................................................................................................... 146 4. Restricted Securities Issued under the Plan May Not Be Resold or Otherwise Transferred Unless They Are Registered Under the Securities Act or an Exemption from Registration Applies .......................... 146 D. Factors Relating to the Rights Offering ........................................................ 147 E. Additional Factors......................................................................................... 149 5. Debtors Could Withdraw the Plan ................................................................ 149 6. Debtors Have No Duty to Update ................................................................. 149 7. No Representations Outside this Disclosure Statement Are Authorized ...... 149 vi AMERICAS 106663920 FILED: NEW YORK COUNTY CLERK 11/18/2022 06:47 PM INDEX NO. 654710/2021 NYSCEF DOC. NO. 94 Case 20-11218-MFW Doc 2913 Filed 03/02/21 Page RECEIVED 9 of 163 NYSCEF: 11/18/2022 Table of Contents Page 8. No Legal or Tax Advice Is Provided by this Disclosure Statement ............. 149 9. No Admission Made ..................................................................................... 150 X. CONFIRMATION OF THE PLAN ...................................................................... 150 A. Acceptance of the Plan.................................................................................. 150 B. Best Interests Test ......................................................................................... 151 C. Feasibility...................................................................................................... 151 D. Notices and Confirmation Hearing ............................................................... 151 XI. CONCLUSION AND RECOMMENDATION .................................................... 154 EXHIBIT A: Plan EXHIBIT B: Plan Support Agreement EXHIBIT C: List of Debtors EXHIBIT D: Debtors’ Organizational Structure EXHIBIT E: Financial Projections EXHIBIT F: Liquidation Analysis EXHIBIT G: [RESERVED] EXHIBIT H: Exit Term Loan Facility Term Sheet EXHIBIT I: Exit Revolving Credit Facility Term Sheet vii AMERICAS 106663920 FILED: NEW YORK COUNTY CLERK 11/18/2022 06:47 PM INDEX NO. 654710/2021 NYSCEF DOC. NO. 94 Case 20-11218-MFW Doc 2913 Filed 03/02/21 Page 10 of 163 RECEIVED NYSCEF: 11/18/2022 I. INTRODUCTION This is the disclosure statement (the “Disclosure Statement”) of The Hertz Corporation (“Hertz Corp.”) and its debtor affiliates (collectively, the “Debtors” and, together with their non-Debtor affiliates, the “Company”), in the above-captioned chapter 11 cases (collectively, the “Chapter 11 Cases”) pending in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”), filed pursuant to section 1125 of title 11 of the United States Code (the “Bankruptcy Code”) and in connection with the Joint Chapter 11 Plan of Reorganization of The Hertz Corporation and Its Debtor Affiliates dated March 1, 2021 (the “Plan”), a copy of which is annexed to this Disclosure Statement as Exhibit A. The Plan constitutes a separate chapter 11 plan for each Debtor. A. Definitions and Exhibits 1. Definitions Unless otherwise defined herein, capitalized terms used in this Disclosure Statement shall have the meanings ascribed to such terms in the Plan or as the context otherwise requir