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Comment by dragontamer | Hacker News Reader

Do you think the buyers of HTZGQ at $5.50 in June 2020 will be proven correct?

Or do you think, that like most other bankrupt companies, HTZGQ will be worthless once these bankruptcy proceedings are done?

The stock is almost certainly going to go to $0. That's just what happens as bankruptcies play out. If you disagree, you're welcome to toss your money into buying some HTZGQ yourself.

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The issue is that Hertz CEOs / board / CFO have extra information and better ideas into how those bankruptcy proceedings are happening. For them to issue shares in this time is grossly immoral. Especially when they're publicly pointing out that yes, bankruptcy proceedings are carrying on as expected: shareholders are expected to be wiped out and assigned a big fat $0.

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It already has gone to zero. The bankruptcy proceedings wrote off all of the old stock and issued an entirely new set of shares, mostly to the debt holders.

(I cannot reply to your response when you edit so often... looks like it resets an anti-spam timer or something)

The proceedings behind a deal at this scale are so private that it is rare to see major salient revisions after a public announcement like this. Nevertheless, I concede the point that it isn't completely final. Presumably they'll be de-listed once that actually happens.

Bankruptcy proceedings are still taking place and are not finalized. HTZGQ will probably go to zero soon, as what you say is almost certainly going to happen.

https://www.prnewswire.com/news-releases/hertz-global-holdin...

As of a few days ago, the PLAN (not yet executed) is to give Knighthead new shares and wipe out the current set of shareholders.

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There is a rival plan to keep HTZGQ shareholders alive. These sorts of plans go back and forth, discussed by the board, the bankruptcy court, and so forth to determine the best course of action.

No plan is ever 100% certain... not until the plan is executed. Still: the current plan is that Knighthead will be the new owners, old shareholders will be wiped out, and old bondholders will get 70%.

If bondholders are only able to get 70% under the current plan, it seems unlikely that any alternatively proposed plan would bring that to 100% somehow (the precondition before old shareholders of HTZGQ to get value out of this...). The plans will change, but the amount of assets that Hertz owns will not change. So I'm not entirely sure where another 500-million buckaroos will come from to make the bondholders whole.

Modern finance is a process of constantly repackaging and reselling risk from people in a better position to evaluate that risk to people in a worse position to evaluate that risk. Finally, after a dozen generations when it arrives at the people least able to evaluate the risk, it crashes to zero, followed by sympathy to the poor suckers (like your local school district) and a bailout.

Hertz just cut out the middle men here and sold directly to suckers, maybe a lot of their executives were also creditors.

Can I interest you in an Iraqi Dinar?

I'll pass on the dinars, unless they are somehow collectible.

May I interest you in some Aaa-rated subprime mortgage backed securities? How about some negative -yield bonds?

Institutions can have conflicts of interest, which individual investors can make up their own mind on. (Whether that's a winning strategy is another question, I admit)

Why especially? Pointing out that the long term value of the stock is $0 while selling it is what makes it moral IMO.

If I sell my broken car while clearly noting that it’s broken, hat makes it ok, not worse than if I’d left it out.

Do you hold this view for sellers of hertz stock that aren’t hertz? What about sellers of stock that bought the stock post bankruptcy?

Yeah, a lot of companies that enter bankruptcy end up with wiped shareholders and new owners in the shape of it's creditors. It's not really news.

Then if some idiots think it's not the case, and there is value, let them bet if they so want, they obviously know better than Hertz. Hertz only decided to issue shares when their share price went over the roof, driven by those same speculators.

As long as things are correctly disclosed ("our stock is worthless, but buy it if you want"), caveat emptor.

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