Fleet News

Budget Group files for bankruptcy in USA

BUDGET Group has become the second international rental giant to file for Chapter 11 bankruptcy in less than a year.

The firm announced last week that it had voluntarily made the filing in the US as part of a programme to reduce non-vehicle debt and arrange new investment, while maintaining normal operations.

Budget Rent a Car International is included in the petition, but this week a spokesman for the firm insisted that UK operations would be unaffected by the change. Budget's US and international franchisees are not involved in the Chapter 11 filing.

Budget has secured a commitment for $750 million of vehicle financing to maintain and grow its fleet of vehicles. In addition, the company has received a commitment for up to $100 million of additional financing to support day-to-day operations in the USA.

Sandy Miller, chairman and chief executive officer of Budget Group said: 'Despite the success of our efforts to increase productivity and rationalise costs, the impact of September 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.'

Budget has already reorganised its UK division, shifting to a franchised network of 103 outlets, with only seven corporately-owned sites.

Last year, National Car Rental in the UK fought to distance itself from its international parent firm ANC Rental Corporation after the USA-based operation filed for Chapter 11 bankruptcy .

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