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Bankrupt Hanjin seeks court protection for its ships
Hanjin, the world’s seventh and South Korea’s largest shipping firm sought court protection after creditors rejected its latest plan for dealing with a hulking $5.37 billion debt.
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South Korea said Monday it will extend financial support for the contractors of Hanjin Shipping, the nation’s largest container shipping line under court receivership.
Hanjin’s receivership filing has prompted ports around the world to block access or refuse service to dozens of the company’s ships on fears they won’t be paid, stranding cargo.
There has been little impact at the Port of Charleston because no Hanjin ships were scheduled to arrive in the days after the bankruptcy. The Korean liner owns 59 of the 132 container and bulk ships in its fleet.
The Korea International Trade Association said about 10 Hanjin vessels in China were seized or likely to be seized by charterers, port authorities or other parties.
The goal is to “normalize” operations by Hanjin Shipping and “minimize damages on export companies”, according to a statement from Hanjin Group. Half of the estimated crew members are Hanjin Shipping employees while the remaining are foreign sailors that have been temporarily hired.
In Seoul on Monday morning as trading resumed after a Seoul court chose to commence a rehabilitation proceeding for the South Korean shipping firm.
“If Hanjin’s vessels have been arrested in jurisdictions that have ratified the Model Law then there is a strong chance the arrest will not be successful, although with the caveat that this is always subject to the local practices and the factual situation”, said Steffen Pedersen, partner at law firm Thomas Cooper in Singapore.
Eurogate, Hamburg’s second-biggest container-terminal operator, informed customerson its website that cargo handled under contract with Hanjin “will only be granted against a cost assumption declaration and payment of all costs”.
Under chapter 15, added to the bankruptcy code in 2005, companies can protect their US assets from creditors while they seek to sell their holdings or to restructure in their home countries.
“CN will not accept additional Hanjin export loads – or bookings from other shipping lines destined for Hanjin vessels”, the release from August 31 continued.
The Korean Government is said to have chose to slowly move Hanjin towards liquidation, which would be biggest bankruptcy in the shipping industry.
Global demand and trade have suffered since the 2008 recession, while steamship lines continued to build more and larger vessels – vast ships that were conceived as cost-effective when freight costs were higher several years ago.
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Weaker trade and overcapacity have sent ocean shipping rates plunging in recent years. They had hit a record low on Monday.