Hertz Global Holdings Inc. announced it and certain of its U.S. and Canadian subsidiaries have filed voluntary petitions for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware.

Hertz reported the impact of COVID-19 on travel demand was “sudden and dramatic, causing an abrupt decline in the company’s revenue and future bookings. Hertz took immediate actions to prioritize the health and safety of employees and customers, eliminate all non-essential spending and preserve liquidity.” Hertz added that “uncertainty remains as to when revenue will return and when the used-car market will fully re-open for sales, which necessitated the action. The financial reorganization will provide Hertz a path toward a more robust financial structure that best positions the company for the future as it navigates what could be a prolonged travel and overall global economic recovery.”

Hertz’s franchised locations, which are not owned by the company, also are not included in the Chapter 11 proceedings. All of Hertz’s businesses globally, including its Hertz, Dollar, Thrifty, Firefly, Hertz Car Sales, and Donlen subsidiaries, are open and serving customers. As of the filing date, the company had more than $1 billion in cash on hand to support its ongoing operations. Depending upon the length of the COVID-19 induced crisis and its impact on revenue, the company may seek access to additional cash, including through new borrowings, as the reorganization progresses.

Kroll Bond Rating Agency (KBRA) has assigned ratings to five classes of American Credit Acceptance Receivables Trust 2020-2, an auto loan ABS transaction.

American Credit Acceptance Receivables Trust 2020-2 issued five classes of notes totaling $287.833 million that are collateralized by a pool of retail automobile contracts, made to subprime obligors and secured by new and used automobiles and motorcycles.

The structure and collateral for ACAR 2020-2 are generally similar with the previous ACAR 2020-1 transaction. However, key structural differences from the prior deal include higher enhancement for all classes, a 1 percent increase to the reserve and no prefunding. In addition, compared to ACAR 2020-1, ACAR 2020-2 includes limited called collateral and stronger asset eligibility that excludes loans that have received deferrals from March 15 to the cut-off date. The transaction has initial hard credit enhancement levels of 65.25 percent for the Class A Notes through 23.50 percent for the Class E Notes. Credit enhancement consists of excess spread, overcollateralization, subordination (except for the Class E Notes) and a reserve account funded at closing.

The financial impact of COVID-19 has included economic slowdown and rising unemployment, which is expected to adversely impact the performance of auto loans, including those supporting the subject transaction. Owing to KBRA’s expectations of high and rising unemployment through Q3 2020 followed by improved conditions, KBRA increased its base case default assumptions for the subject pool. KBRA also used lower recovery rates and a longer recovery lag assumption on defaulted loans.

Santander Consumer USA Holdings Inc. issued a statement regarding its voluntary settlement with 33 states and the District of Columbia, which alleged that auto loans that SC funded through certain automobile dealers dating back to 2010 violated consumer protection laws because of the high risk that certain borrowers would default.

The statement read: “SC’s voluntary agreement with the attorneys general resolves a legacy underwriting issue stemming from an investigation that commenced in 2014 and is another key milestone in addressing issues related to that time period. We are pleased to put this matter behind us. Santander Consumer is fully reserved for this matter, and no additional charges will be taken in connection with the settlement. SC has fully cooperated with the attorneys general throughout the investigation, and the settlement has no material impact on SC’s or Santander US’ operations or our ability to serve customers.

“SC is a responsible lender in a highly regulated environment. SC operates under large financial institution standards, which include rigorous risk, compliance and controls around lending and loan servicing. Over the last several years, we have strengthened our risk management across the board – improving our policies and procedures to identify and prevent dealer misconduct and tightening standards to ensure affordability. All of this important work helps SC remain competitive and well-positioned for future growth.”

 

The 2020 Auto-ISAC Cybersecurity Summit, titled “Building Cybersecurity Resilience – an Attack on One is an Attack on All,” has been scheduled for Oct. 14-15 in Detroit.

Auto-ISAC (Automotive Information Sharing and Analytics Center ) is an industry-wide forum for companies to collaborate and identify threats sooner and share solutions to enhance vehicle cybersecurity.

General Motors will host the event.

The summit is an automotive cybersecurity conference that showcases insights from manufacturers, suppliers, thought leaders, lawmakers, practitioners and other stakeholders and highlights the commitment of members to trust, share, teach, learn, and act.

 Summit topics will explore the state of the global automotive cybersecurity landscape and how Auto-ISAC can help ensure consistent industry-wide cybersecurity capability to build critical resilience.

The Independent Automobile Dealers Association Of California updated its members on new guidelines for brick-and-mortar dealers who would like to perform online sales and home delivery. The announcement came from DMV in VIN memo 2020-04. 

If California dealers are not signed up to view DMV VIN memos, they are encouraged to go to the state DMV website. IADAC first began discussion of this topic with DMV in 2014 and saw little movement until recently when the COVID-19 crisis halted person to person interaction. The online sales and home delivery model became recognized as a health compliance solution for auto sales, but various items required attention as California laws were being violated by dealers practicing online sales and home delivery. 

“IADAC thanks DMV, CalSTA, CNCDA and California NMVB for their diligent efforts in this task,” said IADA Executive director  Larry Laskowski.

IADAC recommends that dealers fully understand these new guidelines to make sure they are compliant should they choose to adopt this model.

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