LISLE, Ill., July 29 (UPI) -- Budget Group Inc. said Monday it had filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court.
The company, which rents cars and trucks under the Budget and Ryder brand names, listed assets of $4.05 billion and debts of $4.33 billion in its Chapter 11 petition.
Chapter 11 petitions were also filed for 48 of the company's subsidiaries, including Budget Rent a Car Corp., Ryder Move Management Inc., Ryder Relocations Services Inc. and Ryder TRS Inc.
The Chapter 11 filing comes about eight months after another car rental company, ANC Rental Corp., filed for Chapter 11.
ANC Rental owns and operates car rental businesses under the brand names Alamo and National.
In May, the Budget had said that it was in discussions with an ad hoc committee of several of its top senior note holders. The discussions focused on a possible exchange of debt for newly issued equity as part of the company's plan to eliminate or substantially reduce its non-vehicle debt.
The company also said in May that it had received written expressions of interest from several private equity investors.
Sandy Miller, chairman and chief executive officer, said, "Despite the success of our efforts to increase productivity and rationalize costs, the impact of Sept. 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 finalizing a solution to our capital structure issues are the right strategic steps to strengthen Budget's market leadership and future growth prospects," Miller said.
Back in June the Wall Street Journal reported that Cendant Corp., which owns rental-car operator Avis Holdings Inc., was in talks to acquire Budget Group through a pre-planned bankruptcy-court proceeding for $100 million in cash and other upfront consideration, plus the assumption of about $3 billion in debt.
In papers filed with the bankruptcy court, Budget Group said the $4.33 billion debt amount it listed doesn't include off-balance sheet obligations.
The asset and debt information the company listed includes assets and debts for all the company's subsidiaries at May 31.
The company "does not certify as to the accuracy of this information," Budget Group said.
Budget Group said that the Chapter 11 filing will allow it to accelerate its plan to reduce its non-vehicle debt and enable it to receive new capital investment while maintaining normal operations.
The company said its domestic and international franchisees are not involved in the Chapter 11 filing.
Budget Group also said it has a commitment for up to $100 million of debtor-in-possession financing and that its existing bank group agreed to continue providing letters of credit to support the company's fleet financing.
The company said it expects that the DIP financing, available cash on hand and cash flow from operations will allow it to meet normal business obligations during the Chapter 11 process.