South Korea’s biggest container shipping line Hanjin Shipping Co has made a decision to apply for court receivership after lenders halted all support, says a report in Bloomberg.
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A creditor-led restructuring scheme for the largest South Korean shipper is set to end September 4, which means the Hanjin Group company will be left with little choice but to file for receivership before the deadline’.
A potential way out is Hyundai Merchant Marine, another ailing container company, merging with Hanjin. The firm said earlier it would file for court receivership after its creditor banks decided on Tuesday to end financial support to the container shipper.
Shares in the shipping line plunged, ending down 24 percent.
Hanjin Shipping also said one of its vessels, the Hanjin Rome, was seized in Singapore by a creditor on Tuesday, while another vessel, the Hanjin Sooho, was denied entry to a port in Shanghai.
Suk Tai-soo, president and chief executive officer of Hanjin Shipping Co, arrives at a court in Seoul, South Korea, August 31, 2016.
The deadline for negotiations with creditors is Sunday, so Hanjin is running out of time, making court receivership more likely.
Hyundai Merchant Marine Co said it will work with authorities to come up with measures without elaborating.
Hanjin, the world’s seventh-largest shipping line by capacity, would become the biggest company in the industry to go under if it is ordered to fold.
According to an official, the statement mentioned that Seaspan had “agreed to adjust the charter rate in alternative ways”, while global financial companies had “expressed consent” regarding Hanjin’s proposal to postpone the repayment of loans, which the shipping line had taken out to finance vessels.
Shipping isn’t the only industry that’s struggling. Hanjin is the primary carrier at Pier T, but several other shipping companies dock there as well.
Yoo also urged lawmakers to pass an 11 trillion won ($9.86 billion) extra budget, now awaiting approval in parliament, aimed at creating thousands of jobs lost by the restructuring process.
“Creditors found it hard to accept Hanjin Shipping’s plan”, Korea Development Bank said.
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The global shipping industry has been operating at a loss since the end of 2015, and it’s set to lose about $5 billion this year amid an oversupply of vessels, according Drewry Maritime Research. “There will still be the same number of ships”.
