The shipping firm has sought bankruptcy protection after a plan to restructure its finances was rejected by its creditor banks on Tuesday last week. The shipper’s parent company is investing more money, but the future remains uncertain. HP said it has products in more than 500 Hanjin-controlled shipping containers and that an inability to “place these products on shelves in a timely manner will likely result in loss of market share”.
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The company is seeking bankruptcy protection at home and in the United States after creditors rejected its latest plan to deal with a 5.37 billion debt. With the company’s assets frozen, its ships are being refused permission to offload or take on containers at ports worldwide, out of concern tugboat pilots or stevedores may not be paid.
Hanjin is one of the world’s biggest shipping lines and filed for bankruptcy protection last week in Seoul. Hanjin Group Chairman Cho Yang-ho has vowed to put millions of dollars in private funds toward a damage-control effort, but a long-term solution to the global bankruptcy crisis has yet to be fully ironed out.
“The 100 billion won funding, if it comes to pass, is not almost enough to save Hanjin Shipping at all”, an official at a creditor bank told Reuters.
The move prevents USA creditors from taking actions against the company’s ships and other assets.
Officials from the US Department of Commerce will meet with Korean counterparts to discuss measures against Hanjin Shipping’s fallout that has deal a blow to the US retailers, local news reported on September 9. “You know whenever a shipping company goes under it affects the shipping industry all over the world”, said Willie Seymore.
On two of those ships sat about $38 million worth of Samsung washing machines, refrigerators, microwaves and parts for televisions and monitors, according to documents filed with the court.
South Korean government-backed creditors offered to separately provide the company with at least US$90m in long-term funding if Hanjin provides the necessary collateral [i.e. a form of secondary protection offered against a loan], Reuters reported.
Given the timing of Hanjin’s bankruptcy, some of Barich’s customers have found their only option is shipping their cargo by plane, he says. “The upcoming months are critically important to retailers, particularly ahead of Black Friday and the holiday shopping season”, the filing said.
While Hanjin’s lawyers try to arrange legal cover in 43 countries against ports taking over vessels, some captains are heading for Singapore, Hamburg or Busan in South Korea, where the company hopes the ships won’t be impounded and will be able to unload so that clients can arrange alternative transport.
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Delays, replacement shipments and other additional costs stemming from the Hanjin crisis will hurt the pockets of cargo owners, retailers, B2B companies, and ultimately consumers.
