NEW YORK - Car-rental company Budget Group Inc. succumbed to its heavy debt burden and filed for bankruptcy protection on Monday, as the recession in business travel that has plagued the sector since Sept. 11 claimed another victim.
Budget's Chapter 11 filing followed the bankruptcy last November of rival ANC Rental Corp., parent of the Alamo Rent-A-Car and National Car Rental brands.
Budget of Lisle, Ill., which was expected to file for bankruptcy, said it has secured $750 million of loans to pay for new cars, along with $100 million of additional funding to keep its operations running as it reorganizes.
Budget, which faces billions of dollars of debt, filed for Chapter 11 protection in the U.S. Bankruptcy Court in Delaware.
It listed $4.05 billion of assets and $4.33 billion of liabilities and said the bankruptcy filing covered it and some of its domestic subsidiaries.
"Despite the success of our efforts to increase productivity and rationalize costs, the impact of September 11 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," Budget's Chief Executive Sandy Miller said in a statement.
Budget needed the $750 million of vehicle financing to increase and upgrade its fleet of Ford Motor Co. vehicles to compete in the peak summer travel months.
Its largest creditor is Wells Fargo & Co.'s main unit Wells Fargo Bank, as trustee for about $430 million of debt, according to court papers. Most of its largest creditors are banks.
Budget, with 6,500 car and truck rental locations worldwide, had been in talks to be bought by travel and real estate firm Cendant Corp. for $100 million, sources close to the talks said.
Budget's bankruptcy filing on Monday made no mention of any deal with Cendant. A Cendant spokeswoman said the company had no comment on the matter.
With the $100 million of debtor-in-possession financing, Budget said day-to-day operations should remain intact as it restructures the company.