My good friend Dick [first names only] had a great eye for opportunity and he convinced me to join him at a car rental company where he was General Manager. He assured me that the company was in it’s last throes and there was an excellent chance that we could negotiate for the assets if it went into bankruptcy.
That’s exactly what happened and on July 1, 1967 we were owners of Capital Rent A Car, Inc. 1st National Bank of Fort Lauderdale handed us the 88 cars they held title to plus $20,000 initial working capital and a two month moratorium on the payment of the cars. Of course the cars were not worth anywhere near the money owed on them and we didn’t have two dimes to rub together. But with no other opportunity we jumped in.
During the next seven years we only were able to make cash decisions, never a business decision. Problem was we were always short on the cash side. We grew because we were aggressive and innovative but always cash short. To stay alive during the next seven years we asked for and received moratoriums and we kited checks which we always made good.
We were doing business with major lenders, GMAC, Ford Motor Credit, Chrysler and about 4 or 5 local banks. They were all cooperative recognizing that we were two nice stupid boys who were sincere but unfortunately inept. However there was one company that we did not fool around with. That was Harry who had a small local car leasing business. We figured that all of our lenders were in business to lend money. Not Harry, he was in business to make a living. Although Harry did have a major, 75 or 80%, well healed partner Harry always got paid on time and without knowing it that paid dividends.
1973 came and brought Arab/Israeli the Yom Kippur war plus higher gasoline prices and a gasoline embargo the following spring. Our business model was to offer the right size car which translated means no sub compacts and heavy on the mid-size and full-size cars. Consequently after the 73-74 winter season we could not dispose of unnecessary inventory. With higher gas prices and gas shortages car wholesalers wanted to buy fuel efficient sub-compacts and maybe a few compacts. Mid-size and full-size cars were in essence, sales proof. What was offered for the larger cars was not sufficient to pay off the loans and obtain the titles. And we didn’t have the cash to buy the titles so we ended up looking at unnecessary cars.
In May surrounded by this rusting fleet we thought about the future, mainly August 20th. In Florida, back in 1974, all rental cars had to have the next year’s tags purchased by that date. We were looking at $20,000 and that was all we could do is look. With bankruptcy staring us in the face we were thinking about our alternatives.
That’s when Harry came to mind. He said he always wanted to be in the daily car rental business. Leasing cars was fine but we were in the exciting part of the business. He didn’t say it once, he must of said it a dozen times. Well, we could help him.
Fortunately Harry never knew of our financial difficulties and that we had more cars than we could rent. So it was not unusual for us to lease 400 Dodge Darts delivered in June for our summer season. In July after the cars were delivered we gave Harry the news. We didn’t have the cash to license the cars and our only alternative was filing bankruptcy. As expected Harry, an Hungarian immigrant with a temper, exploded. We reminded him that he always wanted to be in the car rental business. He needed to speak to his majority partner. Our building leases could be negotiated, the utilities would have to be paid and Southern Bell would let him keep the phone numbers if their bills were paid. And Dick and I would be happy to work for the new corporation and provide our expertise [?].
And that is exactly what happened. Dick and I filed for corporate and personal bankruptcy. The new company opened their doors on September 1, 1974 in our five locations, Miami, Ft Lauderdale, Orlando, Tampa and West Palm. John had his accountant act as president until Mike was hired as president in 1976. Mike had rights of first refusal should John ever want to sell the company.
The name of Harry’s leasing company was Alamo Leasing. Logically the name of the car rental company became Alamo Rent A Car, a major car rental company. But that is not the rest of the story. Every thing worked out well, very well for the players.
To finish the story you should know that the majority partner John, was John D. MacArthur of John D. & Catherine T. MacArthur Trust Foundation.
John passed away in the fall of 1977 and Mike with a group of 8 other people bought the business from the Trustees in 1978. Don’t know the price but I am sure the trustees did not say, “we’ll take a write-off.” Mike eventually, to my knowledge, was the remaining stockholder and sold the company for a substantial sum, hundreds of millions, during the late 90s.
Harry received about $250,000 for his 20 or 25% share of the company. Can you believe he started a car rental company about 1992 and named it Capital Rent A Car. When I questioned the wisdom of that he said that the name was unlucky for me but lucky for him. I am not so sure, he died a few years later before Capital moved to the next level.
As for me, when people asked what did I do when I went bankrupt, I told them that I stopped scratching.