Last week, Hanjin, the world’s seventh and South Korea’s largest shipping firm, filed for bankruptcy in Seoul, seeking court protection after creditors rejected its latest plan for dealing with a hulking $5.37 billion debt. The Financial Services Commission said Hanjin, the country’s largest ocean container shipper, will seek bankruptcy protection in 43 countries, including Canada, Germany and Britain.
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But it is reluctant to commit huge sums of taxpayers’ money, and hopes to orchestrate a takeover by Hanjin’s smaller rival, Hyundai Merchant Marine, which is already being restructured.
Separately, part of the government’s supplementary budget would be earmarked to support small- and medium-sized businesses whose cargoes have been stranded on Hanjin ships as ports and vendors refused to provide services for Hanjin, which is under court receivership, a lawmaker in the ruling Saenuri party said. Whether Hanjin can fend off ship seizures will depend on the jurisdictions involved, lawyers said.
The company will take further legal action in countries beyond the USA for protection of its assets as it works to get a stalled supply chain moving again, says a report in WSJ. Out of 141 vessels the company operates, 68 were not operating normally, were stranded or seized, as of Sunday.
The funding is separate from the roughly 100 billion won in loans that three South Korean government officials said government-backed creditors are ready to provide if Hanjin’s parent provides collateral.
Its bankruptcy would be by far the largest in the history of container shipping, which is suffering from its worst downturn in six decades because of slumping global trade and a slowdown in China.
“Related ministries including the Ministry of Oceans and Fisheries should immediately take emergency transportation measures such as sending container ships to replace seized vessels to minimise disruption on trading companies”, he said during a Cabinet meeting on September 6.
South Korean regulators allowed trading to be resumed Monday after Hanjin’s court receivership was granted, but the share price plummeted by the daily limit of 30 per cent shortly after the market opened.
As Hanjin Shipping (117930.Korea) tries to prevent its ships, which reportedly carry .5 billion worth of cargoes, from being seized at ports around the world, the Korean container shipper’s creditors are talking about a funding rescue again.
Since 2011, Hanjin Shipping has suffered losses. There is no word besides what we see on the news, that the government is making efforts for Hanjin Shipping.
In South Korea, Hanjin shares declined 13.7 percent on Monday to settled at 1,070 Korean won.
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“The government asked Hanjin Group to pay some overdue fees and payments to resolve outstanding cargo issues, saying that it can help”, said Ryu Jae-hyun, an analyst at Mirae Asset Daewoo Securities.
