Hertz Wins Approval to Offer Potentially Worthless Stock (2)

Hertz Global Holdings Inc. can go ahead with its plan to raise cash by selling new shares that the bankrupt car-rental company readily concedes could end up worthless.

Judge Mary Walrath ruled during a bankruptcy court hearing Friday that Hertz can proceed with the offering, which the company has said could bring in as much as $1 billion. It’s seeking to take advantage of the recent improbable rally in its shares, which could help Hertz resolve the massive debts that forced it into bankruptcy.

Buying stock in bankrupt companies is risky because the rules require that all bondholders, suppliers and ...