Individual Term Paper: Analysis of a Default “Hertz 2020”
Refer to Announcements for the assigned company and default year.
“Hertz 2020”
While the 2007-2009 financial crisis pushed many borrowers and debt issues over the edge, this was only the more recent iteration of failures caused by both borrower-specific, industry-related and macro-economy related failures. In the beginning of 2020, we were/are facing the coronavirus COVID-19 crisis – as of the time of this writing, it remains uncertain, unresolved – disruptions in movement and availability of labor in China are starting to cause rippling effects in the global supply chain and the delivery of finished goods to the global markets. Multinational corporations with significant revenue source in the Chinese market will be impacted. This unfolding crisis will certainly threaten global economic growth. For this assignment, you will be assigned a company and their default year, this company has defaulted on a substantial volume of fixed income securities. This is a retrospective analysis of the debt failure — it already happened — there should be plenty of source material — news, reports, financial statements, even bankruptcy filings, etc. Your paper at a minimum, must discuss the following among other things:
Identify the borrower & the debt that fell into default
Discuss the reasons for the default.
Was it because of circumstances unique to the borrower?
Are there any clues in the company’s financial performance 5 years leading up to the bankrupty?
Did any of the company’s industry peers default or declare bankruptcy?
Were there any industry practices that placed the company at risk?
General economic factors?
Or more likely a combination of all 5
How the default was addressed? Did the borrower go through bankruptcy? Was it liquidated or restructured? What factors drove this outcome?
What was the fate of the debtholders? How much were they able to recover and in what form — cash, new debt securities, equity in a restructured firm?
