MANILA, Philippines — A number of companies across the globe have filed for bankruptcy as a result of the coronavirus disease (COVID-19) pandemic.
Fortunately in the Philippines, no company has filed for bankruptcy even after more than two months of community quarantine, according to Labor Secretary Silvestre Bello III, although several companies have signified opting for temporary closure.
Under such circumstances, employees are still secured of their employment status.
Filing for bankruptcy is one remedy for companies that are unable to pay their debts.
In the United States, car-rental company Hertz filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code, a legal proceeding that allows a company to reorganize and buy more time to pay its debts.
“This chapter of the Bankruptcy Code generally provides for reorganization, usually involving a corporation or partnership. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in Chapter 11,” the US Bankruptcy Code specifies.
Reuters reported that Hertz Global Holdings now has nearly $19 billion of debt.
It has roughly 38,000 employees worldwide and more than 700,000 cars that are left idle because of the pandemic.
In the past four years, the company has lost millions of dollars in revenue specifically US$58-M in 2019.
The NBC News reported, meanwhile, that the company so far has shed a total of 16,000 employees.
Hertz has been in operation since 1918 and this is the first time that the company has filed for bankruptcy after more than a century.
As for Hertz Philippines, its operation remains ‘business as usual’ since it is of a different franchise.
Secretary Bello explained that a company that is filing for bankruptcy must justify its decision and ensure that its employees will get a reasonable separation or retrenchment pay depending on the length of service.
“May retrenchment pay na (There is retrenchment pay that is equivalent to) 1/2 month for every year of service. Iyong (As for the) separation pay, one month for every year of service,” Secretary Bello said. MNP (with reports from Rey Pelayo)
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