Simply Wheelz LLC, which does business as Advantage Rent A Car, filed for Chapter 11 bankruptcy protection on Nov. 5, 2013. The company offers car rentals in 33 states and has a location at Phoenix Sky Harbor Airport in Arizona. Advantage had been sold by Hertz Corp to Franchise Services of North America and Macquarie Capital in 2012.
As part of the sale, Simply Wheelz LLC, a division of FSNA, purchased 24,000 vehicles from Hertz under a lease agreement and assumed all residual value risk for the automobiles. Residual value is a term used to describe the value of an asset, in this case an automobile, after its useful life is finished. As of Oct. 25, 2013, 5,295 of these vehicles had been sold via auctions. The average sale price, however, proved to be $1,633 less per vehicle than the book value established by Hertz. Given this discrepancy, FSNA asked Hertz to provide details about the method of calculating the book value of vehicles. FSNA claimed despite the repeated requests, Hertz did not provide the company with information it was contractually obligated to provide.
On Oct. 9, 2013 Simply Wheelz LLC failed to make a scheduled payment to Hertz under the lease agreement, and the two companies were unable to reach a mutually satisfactory solution. Hertz declared its intention to terminate the lease and take back the vehicles, prompting Simply Wheelz to seek bankruptcy protection.