The South Korean shipping line files for receivership amid fears of potential delays and frozen assets
In news broken by Reuters and confirmed later by the line themselves yesterday afternoon, Hanjin Shipping Co Ltd have filed for court receivership from the Seoul Central District Court after losing the support of its banks, as ports in the US, China and Spain denied access to its vessels.
Banks led by state-run Korea Development Bank (KDB) withdrew backing for the world’s seventh-largest container carrier on Tuesday, saying a funding plan by its parent group was inadequate to tackle debt that stood at 5.6 trillion won ($5 billion) at the end of 2015.
The Wall Street Journal reported sources indicate that it is uncertain whether the District Court will decide to have Hanjin liquidated or restructured, but Hanjin will stop accepting bookings for an interim period.
A bankruptcy for Hanjin Shipping would be the largest ever for a container shipper in terms of capacity, according to consultancy Alphaline, exceeding the 1986 collapse of United States Lines.
Hyundai Merchant Marine Co Ltd (011200.KS), the country’s second-largest shipping line, will look to acquire its rival’s healthy assets, including profit-making vessels, overseas business networks and key personnel, South Korea’s Financial Services Commission said.
Shipments that are already on the water will continue moving to their ports, though some delays at destination ports are already being reported, with Shanghai and Xiamen in China, Valencia, Spain, and Savannah, GA, blocking access to Hanjin’s containerships “due to concerns that they wouldn’t be able to pay fees”.
It also appears one vessel – reported to be the Hanjin Rome – has already been arrested in Singapore on Monday.
If a vessel is arrested, and Hanjin does not — or cannot — put up a bond to obtain its release, it is probable some third party will be appointed to arrange for disposition of the goods which will not be subject to a creditor’s lien.
While Hanjin is not a core ocean carrier for MIQ Logistics, we are conducting a thorough audit of our customers’ shipments to ensure they suffer no effects from this fluid situation.
We will monitor the situation, its impact on loaded containers and supply chains worldwide and will keep you informed of any significant developments.
For more information, please contact your MIQ Logistics account manager.