Budget files for bankruptcy in US
Budget Group, the owners of the world’s third largest car rental firm Budget Rent A Car International, has filed for Chapter 11 bankruptcy in the US.
The company, which listed assets of $4.05 billion and debts of $4.33 billion, said its situation was down to the impact of 11 September and subsequent travel downturn.
Chairman and chief executive Sandy Miller said: “Despite the success of our efforts to increase productivity and rationalise costs, the impact of September 11th and the continued recession in the travel sector has left Budget Group with a level of non-vehicle debt greater than our operations can reasonably support.
“We believe that Chapter 11 will accelerate our plan to reduce our non-vehicle debt and will pave the way for new capital investment in the company. Combined with a continued focus on improving our performance, reducing our non-vehicle debt through the Chapter 11 process and finalising a solution to our capital structure issues are the right strategic steps to strengthen Budget’s market leadership and future growth prospects.”
The filing does not involve its US or international franchisees – in the UK of 110 locations, only seven are wholly owned (Stansted, Gatwick, Heathrow plus four central London locations). However a spokesman said that even at these locations it is “business as usual” because the UK is not part of the bankruptcy filing.
Budget now looks likely to be taken over by Avis parent Cendant.
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