The following three statements are all true: In November 2019, Hertz went out to investors asking for $750M. Investors, impressed with what they saw, gave the company $900M instead. In April 2020, four billion dollars of Hertz's debt was rated triple-A, the same rating that the US government gets for its debt. Triple-A is as money good as it gets in this world. One month later Hertz went bankrupt. What happened?
Neiman Marcus is the latest to join a list of growing retailers filing for bankruptcy and they both have something in common – enormous debt burdens from leveraged buyouts led by private equity firms. As the government rolls out trillions of dollars in stimulus funds, a push by the private equity industry, i.e. some of the same firms that own the likes of Neiman Marcus and J. Crew, to shape the stimulus in their favor has met with only modest success. Why?