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Photo Illustration by Pavlo Gonchar/Getty Images

Hertz was the original meme stock we couldn’t make sense of. A Robinhood-fueled stock frenzy after the car rental giant's May 2020 bankruptcy filing spawned finger-wagging and ridicule — but it turns out the day traders were right.

What's new: Hertz's latest bankruptcy plan, in which Knighthead Capital Management and Certares Management will buy the company for $7.4 billion, calls for equity holders to receive about $8 per share, Bloomberg reported Wednesday.

Why it matters: Usually shareholders of bankrupt companies lose their entire investment, while the distressed debt investors make money by taking over the company. That isn't happening this time.

Our thought bubble: The unusual payout stems from a string of rare events that make it unlikely to be repeated very often, if at all.

  • Those circumstances include a once-in-a-generation (hopefully) pandemic, unprecedented government intervention in market liquidity, and supply chain issues that have more recently made rental car rates skyrocket.

Backstory: Hertz filed for Chapter 11 after car rental volumes evaporated at the onset of the pandemic.

  • The technical reason the company headed to court is that it effectively got a margin call on debt backed by its fleet of cars when the refinancing market was also all but shut down.
  • Hertz stock was around $3 at the time and shot up as high as $6.25 in June.
  • The stock euphoria was ignored and ridiculed by investors who thought they knew better — mostly in the bond market. The company's unsecured bonds were trading at a mere 30 cents on the dollar, and they stood in line to be repaid in full with funds from a bankruptcy sale — ahead of the stock.

Yes, but: Soon after Hertz filed, people were already renting cars again, for a summer travel season that would lack the option of European vacations or flying to islands.

  • An unexpected bidding war this past month resulted in billions more to hand out to pre-bankruptcy investors, compared with Hertz's original debt repayment plan.

The bottom line: The rapid fall and quick recovery in the economy and markets created many winners and losers. Hertz shareholders were among the lucky.

Go deeper

Big debt waters tested by Medline buyout

Illustration: Aïda Amer/Axios

The largest LBO financing since the financial crisis is coming to a debt market near you. A bevy of banks made their initial pitch this week to sell investors part of a $15 billion loan backing the $34 billion buyout of medical supplies company Medline Industries.

What's new: A banking group led by JPMorgan and Goldman Sachs asked a select group of high yield fund managers to buy a piece of the Medline debt commitment known as a "bridge loan," sources tell Axios. Investors were asked to make their decisions by Wednesday.

Updated 3 hours ago - Technology

From Malcolm X to "Free Britney," new media shapes the justice system

Illustration: Shoshana Gordon/Axios

True crime documentaries, podcasts and social media campaigns are bringing new attention to real-world legal proceedings — and are often affecting the outcome.

Why it matters: New media platforms can instantly put a national spotlight on cases that have long been forgotten or buried under red tape.

Updated 5 hours ago - Health

The next big bottleneck in the global vaccination effort

Illustration: Rae Cook/Axios

The world still needs more coronavirus vaccines, but an additional bottleneck has emerged in many low-income countries: They need help getting shots in arms.

Why it matters: Increasing vaccination rates across the world is both a humanitarian necessity and the best way to prevent dangerous new variants from emerging, but it increasingly requires complex problem-solving.