Hertz Global Holdings (OTC:HTZG.Q) announced a plan on Tuesday that should enable the vehicle rental company to exit Chapter 11 bankruptcy as a stronger and more financially sound business.

Knighthead Capital Management and Certares Opportunities will serve as sponsors of the plan. They will combine to invest up to $4.2 billion to purchase as much as 100% -- and not less than a majority stake -- of common shares of the reorganized Hertz. The proposal will be accompanied by a new $1 billion first-lien financing and a new $1.5 billion revolving credit facility, which should put the company on pace to exit Chapter 11 in early to mid summer.

Paul Stone, Hertz's CEO, said in a news release: "We've been making excellent progress on our financial and operational initiatives and repositioning our business as we prepare for increased travel demand as the pandemic subsides. We're grateful for the commitment of our exceptional employees and teams around the world working tirelessly to maintain smooth operations with safe and outstanding service to our customers."

Car rental sign

Image source: Getty Images.

The saga since Hertz filed for bankruptcy has included billionaire hedge fund manager Carl Icahn throwing in the towel, a head-scratching jump in the stock price of nearly 900%, and Hertz's eventual delisting from the New York Stock Exchange.

The next step now is for the Bankruptcy Court to meet April 16 and approve the terms of the plan and proposed investments. The reorganized company should emerge with a more-sustainable capital structure, less corporate debt, and a less-leveraged debt structure for its vehicle fleet, which is what got Hertz in trouble initially. Meanwhile, investors will wait for a rebound in travel business.

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