A Seoul court is set to announce this month the bankruptcy of South Korea’s former top ocean box carrier Hanjin Shipping, paving the way for the liner’s liquidation six months after it applied for receivership.
The Seoul Central District Court opted to put an end to a rehabilitation plan for the 40-year-old debt-ridden carrier as the shipper’s liquidation value continued to drop. The court is scheduled to finalize the bankruptcy decision on Feb. 17 after granting a two-week period for appeals.
Hanjin Shipping applied for court receivership in late August 2016 and its appeal was granted in early September of the same year, as it sought protection for its assets from creditors, including the state-run Korea Development Bank, that had rejected its self-rescue plan.
Liquidating the tragic shipping liner is deemed a better decision than continuing its rehabilitation. Estimates have put the liquidation value of the carrier at KRW1.8 trillion (US$1.5 billion).
Launched in 1977, Hanjin Shipping had once been the world’s seventh largest ocean carrier before it succumbed to financial pressure brought on by falling freight rates, an oversupply of ships, and the extended slowdown of the global economy.
To pay for its debts the container shipping line has been selling off its profitable assets. Already sold was its share in port terminal operator Total Terminals International LLC (TTI) and in equipment-leasing firm HTEC, as well as the debt owed to its shareholders, for a total of $78 million.
South Korean compatriot carrier Hyundai Merchant Marine, now the country’s top shipping line, became the second biggest stakeholder in TTI after Swiss shipping corporation MSC, which owns 80% of TTI.
Late last year, SM Group, a mid-sized local group that owns South Korea’s No. 2 bulk carrier Korea Line Corp., also agreed to purchase Hanjin’s U.S.-Asia trade loop and other assets for KRW37 billion.
Photo: Antonio Trogu