The shipping firm’s bankruptcy has left much of its fleet stranded at sea, unable to dock over fears that vessels be seized by creditors.
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Hanjin filed for protection under chapter 15, the section of the U.S. bankruptcy code that deals with global insolvency matters, on Friday to a court in U.S. Bankruptcy Court in Newark, New Jersey.
The bankruptcy of the Hanjin shipping line has thrown ports and retailers around the world into confusion, with giant container ships marooned and merchants worrying whether hundreds of tonnes of goods being carried by the South Korean company will reach shelves.
Many port authorities and port service providers are demanding cash to work on Hanjin ships, the Hanjin spokeswoman said. It was confirmed on September 5 that the Hanjin Group made a decision to newly provide hundreds of billions of won in response to the massive logistics chaos ignited by Hanjin Shipping and was discussing the plan with the Korea Development Bank and will announce the plan in a day or two.
The Hanjin Group chose to give emergency financial support to Hanjin Shipping put under court receivership for the company’s liquidity.
Hanjin’s shares jumped 20 percent on Tuesday on hopes for government help for the company, after falling 13.7 percent on Monday.
On Sunday, the South Korean government said it will take a set of additional measures to ensure there are no delays or disruptions to the flow of cargo caused by the Hanjin fiasco.
“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.
Shares of South Korea’s largest shipping company, Hanjin Shipping, have suffered a sharp drop at the Seoul Stock Exchange due to the delicate situation of the company, whose vessels have lost access to worldwide ports after the company declared suspension of payments.
Hanjin Group, the parent of Hanjin Shipping, is considering whether to provide collateral to secure the loans, said a spokesman for its flagship unit, Korean Air Lines Co 003490.KS .
Since 2011, Hanjin Shipping has suffered losses. Korean Air’s business report on the first half of this year says that its capital and debts stood at 1,931.8 billion won and 21,413.3 billion won in the first half.
Hanjin is not alone in its financial distress. Hanjin has 141 ships, of which 128 are operating.
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“The total industry loss for this year is projected to be $5 billion”, Cordero said.
