ITEM
2.04 TRIGGERING EVENTS THAT ACCELERATE OR INCREASE A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT
The commencement
of the Chapter 11 Cases constituted an event of default that caused the automatic and immediate acceleration of the Debtors’
obligations under the instruments and agreements enumerated below (the “Due
and Payable Instruments”), comprising approximately $6.0 billion aggregate outstanding principal amount of indebtedness,
and triggered cross-default and/or cross-acceleration provisions, as applicable, in certain other debt instruments, including under
certain debt instruments of certain of the International Subsidiaries:
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the Credit Agreement, dated as of June 30, 2016, among
THC, the subsidiary borrowers from time to time party thereto, the several banks and other financial institutions from time to
time party thereto and Barclays Bank PLC, as administrative agent and collateral agent, as the same has been amended, supplemented
or otherwise modified from time to time, and the approximately $857.75 million outstanding under the revolving credit facility,
including letters of credit issued thereunder, and the approximately $656.25 million outstanding under the term loan facility;
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the Letter of Credit Agreement, dated as of November 2,
2017, among THC, the several banks and other financial institutions from time to time party thereto and Barclays Bank PLC, as administrative
agent and collateral agent, as the same has been amended, supplemented or otherwise modified from time to time, and the approximately
$299.03 million outstanding thereunder;
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the Credit Agreement, dated as of June 30, 2016, among
THC, the subsidiary borrowers from time to time party thereto, the several banks and other financial institutions from time to
time party thereto and Credit Agricole Corporate and Investment Bank, as administrative agent, as the same has been amended, supplemented
or otherwise modified from time to time, and the approximately $93.0 million outstanding thereunder;
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the Credit Agreement, dated as of December 13, 2019, among THC, the lenders party thereto and Goldman
Sachs Mortgage Company, as administrative agent and issuing lender, as the same has been
amended, supplemented or otherwise modified from time to time, and the approximately $200.00 million outstanding thereunder;
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the Indenture, dated as of October 16, 2012, among THC
(as successor by merger to HDTFS, Inc.), as issuer, the subsidiary guarantors from time to time parties thereto, and Wells Fargo
Bank, National Association, as trustee, as the same has been amended, supplemented or otherwise modified from time to time, and
the approximately $500.00 million aggregate outstanding principal amount of 6.250% Senior Notes due 2022 issued thereunder;
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the Indenture, dated as of September 22, 2016, among
THC, as issuer, the subsidiary guarantors from time to time parties thereto, and Wells Fargo Bank, National Association, as trustee,
as the same has been amended, supplemented or otherwise modified from time to time, and the approximately $800.00 million in aggregate
outstanding principal amount of 5.500% Senior Notes due 2024 issued thereunder;
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the Indenture, dated as of June 6, 2017, among THC,
as issuer, the subsidiary guarantors from time to time parties thereto, and Wells Fargo Bank, National Association, as trustee
and note collateral agent, as the same has been amended, supplemented or otherwise modified from time to time, and the approximately
$350.00 million aggregate outstanding principal amount of 7.625% Senior Secured Second Priority Notes due 2022 issued thereunder;
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the Indenture, dated as of August 1, 2019, among THC,
as issuer, the subsidiary guarantors from time to time parties thereto, and Wells Fargo Bank, National Association, as trustee,
as the same has been amended, supplemented or otherwise modified from time to time, and the approximately $500.00 million aggregate
outstanding principal amount of 7.125% Senior Notes due 2026 issued thereunder;
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the Indenture, dated as of November 25, 2019, among
THC, as issuer, the subsidiary guarantors from time to time parties thereto, and Wells Fargo Bank, National Association, as trustee,
as the same has been amended, supplemented or otherwise modified from time to time, and the approximately $900.00 million aggregate
outstanding principal amount of 6.000% Senior Notes due 2028 issued thereunder;
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the Indenture, dated as of September 22, 2016, among Hertz
Netherlands, as issuer, THC, as parent guarantor, the subsidiary guarantors from time to time parties thereto, Wilmington Trust,
National Association, as trustee, Deutsche Bank AG, London Branch, as paying agent, and Deutsche Bank Luxembourg S.A., as registrar,
transfer agent and authenticating agent, as the same has been amended, supplemented or otherwise modified from time to time, and
the approximately €225.00 million aggregate outstanding principal amount of 4.125% Senior Notes due 2021 (the “4.125%
Notes”) issued thereunder (though a waiver has been requested from the holders of the 4.125% Notes which, if obtained, would
waive the applicable event of default until September 30, 2020 and rescind the acceleration of the 4.125% Notes caused by such
event of default);
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the Indenture, dated as of March 23, 2018, among Hertz Netherlands,
as issuer, THC, as parent guarantor, the subsidiary guarantors from time to time parties thereto, Wilmington Trust, National Association,
as trustee, Deutsche Bank AG, London Branch, as paying agent, and Deutsche Bank Luxembourg S.A., as registrar, transfer agent and
authenticating agent, as the same has been amended, supplemented or otherwise modified from time to time, and the €500.00
million aggregate outstanding principal amount of 5.500% Senior Notes due 2023 (the “5.500% 2023 Notes”) issued thereunder
(though a waiver has been requested from the holders of the 5.500% 2023 Notes and the requisite amount of such holders have provided
their consent to such waiver, conditional on the waiver of the 4.125% Notes being obtained, and if such waiver becomes operative,
would waive the applicable event of default until September 30, 2020 and rescind the acceleration of the 5.500% 2023 Notes caused
by such event of default); and
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the Loan Agreement, made as of December 31, 2019, by and among Donlen Canada Fleet Funding LP,
as borrower, Donlen Fleet Leasing Ltd., as seller, Computershare Trust Company of Canada, in its capacity as trustee of Stable
Trust, as conduit lender, and Canadian Imperial Bank of Commerce, as committed lender, and the approximately
CA$37.00 million outstanding thereunder.
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The commencement
of the Chapter 11 Cases also triggered defaults, termination events and amortization events that caused certain available cash,
including cash generated from vehicle sales and returns to vehicle manufacturers, to be applied towards the repayment of the obligations
of the Company’s Non-Debtor Financing Subsidiaries under the instruments
and agreements enumerated below (the “Amortizing Instruments,” and together with the Due and Payable Instruments, the
“Applicable Instruments”), comprising approximately $13.54 billion
aggregate principal amount of third-party indebtedness:
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the Amended and Restated Group I Supplement, dated as of October 31, 2014 (as amended by Amendment
No. 1 thereto, dated as of June 17, 2015, the “Group I Supplement”) to the Amended and Restated Base Indenture, dated
as of October 31, 2014, by and between HVF II and The Bank of New York Mellon Trust Company, N.A., as trustee (in such capacity,
the “HVF II Trustee”), by and between HVF II and the HVF II Trustee;
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the Sixth Amended and Restated Series 2013-A Supplement to the Group I Supplement, dated as of
February 21, 2020, by and among HVF II, the HVF II Trustee, THC, as administrator (in such capacity, the “Group I Administrator”),
Deutsche Bank AG, New York Branch, as administrative agent, certain committed note purchasers party thereto from time to time,
certain conduit investors party thereto from time to time, and certain funding agents for the investor groups party thereto from
time to time, and the approximately $4,855.00 million aggregate outstanding principal
amount comprised of Series 2013-A Variable Funding Rental Car Asset Backed Notes, Class A, Series 2013-A Variable Funding Rental
Car Asset Backed Notes, Class B, Series 2013-A Variable Funding Rental Car Asset Backed Notes, Class C and Series 2013-A Variable
Funding Rental Car Asset Backed Notes, Class D, issued thereunder;
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the Series 2015-3 Supplement to the Group I Supplement, dated as of October 7, 2015, by and among
HVF II, the Group I Administrator, and the HVF II Trustee and the approximately $371.16
million aggregate outstanding principal amount comprised of Series 2015-3 2.67% Rental Car Asset Backed Notes, Class A, Series
2015-3 3.71% Rental Car Asset Backed Notes, Class B, Series 2015-3 4.44% Rental Car Asset Backed Notes, Class C and Series 2015-3
5.33% Rental Car Asset Backed Notes, Class D, issued thereunder;
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the Series 2016-2 Supplement to the Group I Supplement, dated as of February 11, 2016, by and among
HVF II, the Group I Administrator, and the HVF II Trustee and the approximately $594.65
million aggregate outstanding principal amount comprised of Series 2016-2 2.95% Rental Car Asset Backed Notes, Class A, Series
2016-2 3.94% Rental Car Asset Backed Notes, Class B, Series 2016-2 4.99% Rental Car Asset Backed Notes, Class C and Series 2016-2
5.97% Rental Car Asset Backed Notes, Class D, issued thereunder;
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the Series 2016-4 Supplement to the Group I Supplement, dated as of June 8, 2016, by and among
HVF II, the Group I Administrator, and the HVF II Trustee, and the approximately $424.18
million aggregate outstanding principal amount comprised of Series 2016-4 2.65% Rental Car Asset Backed Notes, Class A, Series
2016-4 3.29% Rental Car Asset Backed Notes, Class B, Series 2016-4 5.06% Rental Car Asset Backed Notes, Class C and Series 2016-4
6.03% Rental Car Asset Backed Notes, Class D, issued thereunder;
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the Series 2017-1 Supplement to the Group I Supplement, dated as of September 20, 2017, by and
among HVF II, the Group I Administrator, and the HVF II Trustee and the approximately $450.00
million aggregate outstanding principal amount comprised of Series 2017-1 2.96% Rental Car Asset Backed Notes, Class A, Series
2017-1 3.56% Rental Car Asset Backed Notes, Class B, Series 2017-1 5.27% Rental Car Asset Backed Notes, Class C and Series 2017-1
6.49% Rental Car Asset Backed Notes, Class D, issued thereunder;
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the Series 2017-2 Supplement to the Group I Supplement, dated as of September 20, 2017, by and
among HVF II, the Group I Administrator, and the HVF II Trustee, and the approximately
$370.37 million aggregate outstanding principal amount comprised of Series 2017-2 3.29% Rental Car Asset Backed Notes, Class A,
Series 2017-2 4.20% Rental Car Asset Backed Notes, Class B, Series 2017-2 5.31% Rental Car Asset Backed Notes, Class C and Series
2017-2 6.77% Rental Car Asset Backed Notes, Class D, issued thereunder;
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the Series 2018-1 Supplement to the Group I Supplement, dated as of January 24, 2018, by and among
HVF II, the Group I Administrator, and the HVF II Trustee, and the approximately $1,058.20 million aggregate outstanding principal
amount comprised of Series 2018-1 3.29% Rental Car Asset Backed Notes, Class A, Series 2018-1 3.60% Rental Car Asset Backed Notes,
Class B, Series 2018-1 4.39% Rental Car Asset Backed Notes, Class C and Series 2018-1 5.86% Rental Car Asset Backed Notes, Class
D, issued thereunder;
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the Series 2018-2 Supplement to the Group I Supplement, dated as of June 27, 2018, by and among
HVF II, the Group I Administrator, and the HVF II Trustee, and the approximately $212.94
million aggregate outstanding principal amount comprised of Series 2018-2 3.65% Rental Car Asset Backed Notes, Class A, Series
2018-2 4.14% Rental Car Asset Backed Notes, Class B, Series 2018-2 4.82% Rental Car Asset Backed Notes, Class C and Series 2018-2
6.14% Rental Car Asset Backed Notes, Class D, issued thereunder;
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the Series 2018-3 Supplement to the Group I Supplement, dated as of June 27, 2018, by and among
HVF II, the Group I Administrator, and the HVF II Trustee, and the approximately $213.19
million aggregate outstanding principal amount comprised of Series 2018-3 4.03% Rental Car Asset Backed Notes, Class A, Series
2018-3 4.37% Rental Car Asset Backed Notes, Class B, Series 2018-3 5.11% Rental Car Asset Backed Notes, Class C and Series 2018-3
6.42% Rental Car Asset Backed Notes, Class D, issued thereunder;
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the Series 2019-1 Supplement to the Group I Supplement, dated as of February 6, 2019, by and among
HVF II, the Group I Administrator, and the HVF II Trustee, and the approximately $745.30
million aggregate outstanding principal amount comprised of Series 2019-1 3.71% Rental Car Asset Backed Notes, Class A, Series
2019-1 4.10% Rental Car Asset Backed Notes, Class B, Series 2019-1 4.99% Rental Car Asset Backed Notes, Class C and Series 2019-1
6.36% Rental Car Asset Backed Notes, Class D, issued thereunder;
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the Series 2019-2 Supplement to the Group I Supplement, dated as of May 29, 2019, by and among
HVF II, the Group I Administrator, and the HVF II Trustee, and the approximately $798.51
million aggregate outstanding principal amount comprised of Series 2019-2 3.42% Rental Car Asset Backed Notes, Class A, Series
2019-2 3.67% Rental Car Asset Backed Notes, Class B, Series 2019-2 4.26% Rental Car Asset Backed Notes, Class C and Series 2019-2
6.12% Rental Car Asset Backed Notes, Class D, issued thereunder;
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the Series 2019-3 Supplement to the Group I Supplement, dated as of November 26, 2019, by and among
HVF II, the Group I Administrator, and the HVF II Trustee, and the approximately $799.69
million aggregate outstanding principal amount comprised of Series 2019-3 2.67% Rental Car Asset Backed Notes, Class A, Series
2019-3 3.03% Rental Car Asset Backed Notes, Class B, Series 2019-3 3.43% Rental Car Asset Backed Notes, Class C and Series 2019-3
5.00% Rental Car Asset Backed Notes, Class D, issued thereunder;
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the Base Indenture, dated as of September 30, 2013 (the “HFLF Base Indenture”), by
and between HFLF and The Bank of New York Mellon Trust Company, N.A., as trustee (in such capacity, the “HFLF Trustee”);
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the Fourth Amended and Restated Series 2013-2 Indenture Supplement to the HFLF Base Indenture,
dated as of February 21, 2020, by and among HFLF, the HFLF Trustee, Donlen Corporation, as Group I Servicer and Group I Administrator
(in such capacity, the “Donlen Group I Administrator”), DNRS II LLC, as Group I Borrower and Initial Beneficiary, Barclays
Bank PLC, as administrative agent, certain committed purchasers party thereto from time to time, certain conduit purchasers party
thereto from time to time, and certain funding agents for the purchaser groups party thereto from time to time, and the approximately
$485.00 million aggregate outstanding principal amount comprised of Series 2013-2 Floating Rate Variable Funding Asset Backed
Notes, Class A, Series 2013-2 Floating Rate Variable Funding Asset Backed Notes, Class B and Series 2013-2 Floating Rate Variable
Funding Asset Backed Notes, Class C, issued thereunder;
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the Series 2017-1 Indenture Supplement to the HFLF Base Indenture, dated as of April 25, 2017,
by and between HFLF and the HFLF Trustee, and the approximately $154.93 million aggregate
outstanding principal amount comprised of Series 2017-1 Floating Rate Asset Backed Notes, Class A-1, Series 2017-1 Fixed Rate Asset
Backed Notes, Class A-2, Series 2017-1 Fixed Rate Asset Backed Notes, Class B, Series 2017-1 Fixed Rate Asset Backed Notes, Class
C, Series 2017-1 Fixed Rate Asset Backed Notes, Class D and Series 2017-1 Fixed Rate Asset Backed Notes, Class E, issued thereunder;
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the Series 2018-1 Indenture Supplement to the HFLF Base Indenture, dated as of May 3, 2018, by
and between HFLF and the HFLF Trustee, and the approximately $374.06 million aggregate
outstanding principal amount comprised of Series 2018-1 Floating Rate Asset Backed Notes, Class A-1, Series 2018-1 Fixed Rate Asset
Backed Notes, Class A-2, Series 2018-1 Fixed Rate Asset Backed Notes, Class B, Series 2018-1 Fixed Rate Asset Backed Notes, Class
C, Series 2018-1 Fixed Rate Asset Backed Notes, Class D and Series 2018-1 Fixed Rate Asset Backed Notes, Class E, issued thereunder;
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the Series 2019-1 Indenture Supplement to the HFLF Base Indenture,
dated as of May 22, 2019, by and between HFLF and the HFLF Trustee, and the approximately
$578.12 million aggregate outstanding principal amount comprised of Series 2019-1 Floating Rate Asset Backed Notes, Class
A-1, Series 2019-1 Fixed Rate Asset Backed Notes, Class A-2, Series 2019-1 Fixed Rate Asset Backed Notes, Class B, Series 2019-1
Fixed Rate Asset Backed Notes, Class C, Series 2019-1 Fixed Rate Asset Backed Notes, Class D and Series 2019-1 Fixed Rate Asset
Backed Notes, Class E, issued thereunder; and
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the Indenture, dated as of September 14, 2015 between, among others, TCL Funding Limited Partnership
as issuer, Hertz Canada Limited as co-servicer, Dollar Thrifty Automotive Group Canada, Inc. as co-servicer, Hertz Canada Vehicles
Partnership, Hertz Canada Limited Partnership and DTGC Car Rental Partnership as guarantors, and BNY Trust Company of Canada as
indenture trustee, and the approximately CA$350.00 million aggregate
outstanding principal amount of Series 2015-A Variable Funding Rental Car Asset Backed Notes issued thereunder.
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The
Due and Payable Instruments provide that, as a result of the commencement of the Chapter 11 Cases, the financial obligations thereunder,
including any principal amount, together with accrued interest thereon, are immediately due and payable. The Amortizing Instruments
provide that, in the case of an amortization event under an obligation of a Non-Debtor Financing Subsidiary, proceeds of the disposition
of vehicles (either by sale into the market or return to vehicle manufacturers) will be applied to the payment of principal and
interest on such obligation and will not be available to the Company for other purposes. Any efforts to enforce, as against the
Debtors or their property, the payment obligations under the Applicable Instruments, and any other instruments and agreements,
are automatically stayed as a result of the Chapter 11 Cases, and creditors’ rights of enforcement are subject to the applicable
provisions of the Bankruptcy Code. Consequently, pursuant to the automatic stay as a result of the Chapter 11 Cases, the Company
is not required to liquidate its vehicle fleet under the terms of the Applicable Instruments and the Company may utilize its current
vehicle fleet in its operations and maintain control over the disposition of those vehicles, subject to the applicable provisions
of the Bankruptcy Code.
On May 22, 2020, Hertz Netherlands and certain other International
Subsidiaries entered into a limited waiver agreement in respect of the Issuer Facility Agreement, dated as of September 25, 2018,
between, among others, International Fleet Financing No.2 B.V. as issuer, Hertz Europe Limited as issuer administrator, Credit
Agricole Corporate and Investment Bank as administrative agent and BNP Paribas Trust Corporation UK Limited as issuer security
trustee, as amended, restated or otherwise modified from time to time (the “European ABS Waiver”) pursuant to which
the Waiving Parties (as defined therein) agreed to waive any default or event of default that could have resulted from the Chapter
11 Cases. The European ABS Waiver will expire on September 30, 2020 or, if sooner, the date on which Hertz Netherlands or certain
other International Subsidiaries that are party to the European ABS Waiver fail to comply with certain agreements contained in
the European ABS Waiver, which include certain limitations on Hertz Netherlands or certain other International Subsidiaries’
ability to make certain restricted payments, investments and prepayments of indebtedness during the waiver period and a requirement
to deliver certain financial information to the Waiving Parties during the waiver period. This waiver is conditioned on (i) the
waiver of the VFN Issuance Facility Agreement, dated as of December 7, 2010, (as
amended and restated from time to time) by and among HA Fleet Pty Limited, as issuer, Hertz Australia Pty Limited, as administrator,
Westpac Banking Corporation as administrative agent, certain committed note purchasers, certain conduit investors, certain funding
agents for the investor groups and P.T. Limited, as security trustee, which has been obtained and is in effect, (ii)
the waiver of the Vehicle Funding Facilities Agreement dated February 7, 2013 (as amended and restated from time to time)
between Hertz (U.K.) Limited, Hertz Vehicle Financing U.K. Limited and Lombard North Central Plc, which has not been obtained at
this time, and (iii) the waiver of the 4.125% Notes being obtained, which has not been obtained at this time. If
the conditions to the effectiveness of such waiver are not satisfied and this waiver does not take effect promptly, it may be necessary
to include Hertz Netherlands and certain of the other International Subsidiaries who guarantee the relevant underlying debt in
the Chapter 11 Cases.
The
foregoing description of the European ABS Waiver does not purport to be complete and is subject
to, and qualified in its entirety by reference to, the full text of the European ABS Waiver,
a copy of which is filed as Exhibit 10.1 to this current report on Form 8-K and is incorporated by reference herein.