One of the major South Korean manufacturers of Christmas gifts is Samsung, which has stated that the company has products worth United States dollars 38 million on board two Hanjin Ships located off the Long Beach Terminal in Los Angeles. The delay in rescue funding has placed Korea’s cargoes bound for the U.S.at risk as the US bankruptcy court on Tuesday issued a provisional injunction for Hanjin ships calling at American ports until the shipper submits persuasive payment plans.
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Hanjin, one of the world’s largest shipping companies, filed for the equivalent of chapter 11 in South Korea last week and days later sought chapter 15 bankruptcy protection in the U.S. Chapter 15, which Judge Sherwood approved on an interim basis Tuesday, gives a foreign company the benefits of U.S. bankruptcy law, including protections that prevent creditors from seizing assets.
“We have the money”, said Ilana Volkov, an attorney for Hanjin, told a U.S. Bankruptcy Court hearing in Newark, New Jersey on Friday.
South Korea said it expects Hanjin Greece to start unloading cargo on Saturday morning USA time.
As several container ships of the South Korean firm have been denied access to ports around the world, cargo owners are scrambling to try to recover their goods and get them to customers, the paper said.
That’s because other shipping companies have likely put some of their containers on the Hanjin vessels as well.
“Our ships can become ghost ships”, said Kim Ho-kyung, a manager at Hanjin Shipping’s labor union.
Delays, replacement shipments and other costs will hurt not only Samsung, but also USA retailers and consumers, Jun Tae Ahn, chief financial officer for Samsung Electronics’ visual display business division, said in a filing in bankruptcy court.
The shipping company has posted net losses every year since 2011.
Three Hanjin ships continued to sit Tuesday off the coast of Southern California, with their crews (normally about 25 workers) languishing. “The upcoming months are critically important to retailers, particularly ahead of Black Friday and the holiday shopping season”, the filing said.
The South Korean government announced it would make $90 million available to Hanjin if the company could match the amount, which the company signaled it would do, according to the Wall Street Journal. But Hanjin Shipping, with $5.5 billion in debt, would be the largest cargo carrier to fail if the company is dissolved. The company handles an estimated 7.8% of trans-Pacific freight destined for the U.S. But the shipping business has faced rough seas recently. The Seoul court said, however, that even if this came through the shipper needed more.
Meanwhile, ships may soon be moving again, but the full impact of the bankruptcy is only beginning to be felt.
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Still, shipping prices have spiked in the wake of Hanjin’s ongoing legal disputes, and companies and retailers could be forced to either raise prices on the shelves or take a sizable earnings hit.
