A tweet from Barbarian Capital showing the legal filings to the SEC to allow the sale of new stock
Bankruptcy court Judge Mary Walrath set a hearing for today to determine whether bankrupt rental-car company Hertz can issue nearly 250 million new shares of common stock it hopes will fetch around $1 billion.
Why it matters: Shares of bankrupt companies are typically worthless, except in rare instances where a company can repay its debt in full and money is left over for equity holders.
But Hertz has become a darling of the stock market in recent weeks with its shares rallying from 56 cents on May 26 to $5.53 on Monday (before falling back to $2.06 Thursday).
What they're saying: “The recent market prices of and the trading volumes in Hertz’s common stock potentially present a unique opportunity," the company’s lawyers said in a filing.
What others are saying: Jared Ellias, a law professor at UC Hastings College of Law, saw things slightly differently.
"This is outrageous. These directors likely know that the stock is worthless and instead of trying to stop uninformed investors from gambling on a dead stock, they are selling into the market."
