Hertz has suspended its plan to sell up to $500 million in shares after the Securities and Exchange Commission voiced concern about the deal and launched a review.

Trading of Hertz stock had been halted for several hours before resuming shortly before 3:30 p.m. ET. Once trading resumed, the shares were volatile, jumping double digits before closing up 2.6% to $2.

Hertz in a regulatory filing Wednesday said the sale was “promptly suspended pending further understanding of the nature and timing of the Staff’s review.”

The SEC, according to the filing, verbally told the company of its plans to review the sale on Monday. Hertz said it has remained in “regular contact” with the agency this week.

Hertz wanted to use the sale to leverage interest in its stock, which had seen volatile trading in the wake of its bankruptcy filing. The company felt it was a better option than obtaining so-called debtor-in-possession financing. DIP financing is a loan that the company would need to pay back. However, if it were to sell stock, the funds it raises would not need to be reimbursed. 

SEC Chairman Jay Clayton said Wednesday that the regulator had issues with Hertz’s plan to sell stock while the rental car company is in the middle of bankruptcy proceedings.

“In this particular situation we have let the company know that we have comments on their disclosure,” SEC Chairman Jay Clayton said Wednesday on CNBC’s “Squawk on the Street.” “In most cases when you let a company know that the SEC has comments on their disclosure they do not go forward until those comments are resolved.”

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Hertz filed for bankruptcy May 22 as demand for car rentals dried up as travelers have stayed home during the coronavirus pandemic. The stock hit a low of 40 cents intraday on May 26. But in the days that followed, the shares began to recover and eventually surged to more than $6 per share last Monday.

Following the increase, Hertz asked the bankruptcy court Thursday to allow it to sell up to $1 billion in shares. The request was approved by the court Friday. Separately, it also appealed to the New York Stock Exchange not to delist its stock. 

Hertz said in a government filing Monday that it would sell up to $500 million in common stock. It warned potential investors that it’s almost certain that the equity will become worthless.

Such a sale is highly unusual for a company going through Chapter 11 bankruptcy proceedings since common shareholders, who are last in line when assets are allocated during court proceedings, may be left with worthless stock.

The court, in its ruling, said the approval “in no event will result in the issuance” of the shares. The debtors are authorized, but not required, to sell shares of the common stock.