Hanjin Shipping sought bankruptcy protection under Chapter 15 at the US Bankruptcy Court in New Jersey last week, days after the company filed for court receivership in South Korea on August 31.
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Exporters and importers are concerned that their merchandise shipments would be stuck on Hanjin’s container ships worldwide as the company’s ships would be held at ports as collateral for its unpaid bills.
Hanjin Shipping is seeking protection from creditors in dozens of countries, hoping to minimise seizures of its assets.
As reported by worldwide media, Korea Development Bank (KDB), which is the main creditor of Hanjin Shipping, announced to cut its financial support for the company on August 30, one day before the company filed for bankruptcy at a court in Seoul.
Judge John Sherwood in Newark, New Jersey, on Tuesday ordered a hearing on Friday to make sure that creditors are protected during the bankruptcy.
Hanjin Shipping’s collapse lead to chaos across the global supply chains, with ports around the world reportedly blocking access to more than half of the company’s ships due to concerns that they would not be able to pay fees, and some vessels being seized.
The shipper plans to seek legal protection of its assets in 43 countries, according to the Financial Supervisory Commission. According to local media reports, that amounts to 600bn won ($543m).
Kim Tae Il, a Research Analyst at the Korea Maritime Institute in Busan, said: “The government is trying to extinguish the most immediate fire”.
The French shipping company CMA CGM said that it would discharge the South Korean company’s containers already on-board its vessels to the final destination, but it would no longer load its containers on the carrier’s ships.
Officials appear set on a consolidation – without committing huge sums of public money – of Hanjin and its smaller rival, Hyundai Merchant Marine, which already is being restructured.
Hanjin Shipping was handling almost 8 percent of the trans-Pacific trade volume for the USA market, and with its container ships marooned offshore, major retailers have been scrambling to devise contingency plans to get their merchandise into stores. Also past year, the company wrote to its creditors including KDB requesting debt restructuring and assistance to deal with reductions in its assets and ship lease fees. Last week, creditors led by the Korea Development Bank rejected a plan by Hanjin Group to spend another 500bn won ($447.2m) to rescue the shipping company, way short of Hanjin Shipping’s debts of more than 6tn won ($5.37bn).
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Hanjin’s shares jumped 20 percent on Tuesday on hopes for government help for the company, after falling 13.7 percent on Monday.
