Budget Files For Chapter 11

Budget Group Inc., parent company of Budget Rent a Car, today formally filed for Chapter 11 bankruptcy protection in federal court. Should protection be granted, Budget would become third among the top five car rental firms to seek bankruptcy protection within the past year. ANC Rental Corp.'s National and Alamo brands filed Chapter 11 in November.

Budget chairman and CEO Sandy Miller cited the impact of Sept. 11 and the "continued recession in the travel sector" as key reasons the company had acquired more debt than it could support. But according to Neil Abrams, president of Purchase, N.Y.-based Abrams Consulting Group Inc., troubles for both Budget and ANC began before Sept. 11. Budget listed debts of $4.33 billion that outweigh its $4.05 billion assets.

In a statement, the Daytona Beach, Fla.-based company said none of its locations will be affected by the filing, and it has secured the financing needed to continue regular operations.

Abrams remained optimistic about Budget's future and how the particularly shaken business travel sector will continue to serve its corporate clients. "Everything I've seen in my travels and in my discussions within the travel management community suggests there isn't a great deal of concern because there hasn't been a great deterioration in the quality of the product put out there," Abrams said. "However, it could be a concern for companies seeking to change suppliers or put out new RFPs," though companies still can seek the safety net of secondary and tertiary suppliers.