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Hanjin Shipping filed for United States bankruptcy protection, shares dive 25% Monday
Hanjin Group will raise the remaining 60 billion won using its stake in a terminal at Port of Long Beach and other assets as collateral.
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Its failure would be the largest container-shipping failure in history, dwarfing all previous carrier bankruptcies, according to the report.
Shares in South Korea’s foundering shipping giant Hanjin were volatile Monday after it filed for bankruptcy protection in Seoul and the USA, rocking the troubled maritime freight industry.
“Without expertise or understanding of the industry, Choi Eun-Young was appointed as the CEO only because she was a relative”, Lee Ji-soo, an attorney at Law & Business Research Center in Seoul, said of Choi’s time at the helm. Last week, creditors led by the Korea Development Bank rejected a plan by Hanjin Group to spend another 500 billion won ($447.2 million) to rescue the shipping firm, way short of Hanjin Shipping’s more than 6 trillion won ($5.37 billion) in debts.
As per reports, some Hanjin ships were seized in China for the creditors, while creditors in the USA have commenced legal action against the company. The State Ports Authority said it will not handle any Hanjin-shipped exports and will demand payment in advance for imports until further notice.
The Financial Supervisory Commission said 79 of Hanjin’s vessels, including 61 container ships, have had their operations disrupted. Most are container ships although it has some dry bulk carriers. Hanjin’s collapse has come during the shipping industry’s busiest season ahead of the year-end holidays. That figure includes one vessel seized in Singapore by a creditor, a company spokeswoman said.
“Given the mutual interests, Hanjin may as well seek the support of large clients”.
Shipping experts say that saving Hanjin Shipping is the cheapest and most infallible way to riding out the current crisis.
“Hanjin called us and said: ‘We’re going bankrupt and we can’t pay any bills – so don’t bother asking, ‘ ” said J. Kip Louttit, executive director of the Marine Exchange of Southern California, which provides traffic control for the ports of Los Angeles and Long Beach.
“The government agreed to provide cheap long-term loans to Hanjin Shipping if Hanjin Group or Chairman Cho Yang-ho offer loan securities that have asset value in Hanjin Shipping”, said Saenuri policy chief Kim Gwang-lim after attending a ruling party-government meeting on September 6.
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Hanjin Shipping shares jumped more than 25 percent after Yonhap reported the funding decision, citing party and government officials, before later paring some gains.