According to mainstream press, the Budget Group, parent company of Budget Rent A Car, will likely file for bankruptcy protection within the next few weeks, at which time Cendant Corp., owner of Avis Holdings, will apparently be first in line to acquire the rental car concern. Cendant would pay $100 million in cash and assume about $3 billion in debt, reports stated.
As ASR has been reporting since Budget missed an interest payment on its senior debt in April, the event of bankruptcy would technically trigger an early amortization, which for rental car ABS is essentially a fleet liquidation - the proceeds theoretically cover full principal to note holders. In this case, however, sources anticipate Budget's deals would not wind down, and that it would continue making its master lease payments even in the event of bankruptcy, particularly if the company is in fact acquired by Cendant. The reasoning: Cendant's intention is apparently to beef up its rental car empire, so why liquidate the fleet? Of course, this is all source speculation.