by The Wall Street Journal
South Korea’s Hanjin Shipping Co., which roiled global trade and temporarily marooned more than half a million cargo containers when it filed for bankruptcy, says it has raised only a fraction of what it needs to repay creditors, whose claims total about $10.5 billion.
In court papers filed Friday with the US Bankruptcy Court in Newark, N.J., the trustee overseeing the carrier’s bankruptcy proceeding in Seoul said Hanjin has raised about $220 million since filing for bankruptcy nearly a year ago.
Hanjin, once one of the world’s largest container-shipping companies, filed for receivership in South Korea in August last year. The company has since been selling ships, stakes in seaport terminals and other assets, with proceeds destined to repay creditors, whose claims must pass muster with a Korean court.
The shipper says more than 180 creditors attended an initial court-supervised meeting, held June 1.
In Friday’s court papers, Hanjin said it was unclear when distributions to creditors would begin. But it made clear those distributions would be carried out according to a plan worked out in South Korea and consistent with Korean bankruptcy law.
A Korean judge ordered Hanjin’s liquidation earlier this year.
Hanjin filed for chapter 15 bankruptcy protection in the US just days after filing for receivership in South Korea. The company initially sought to keep its business alive through a restructuring but eventually succumbed to a mountain of debt.
By filing for chapter 15, companies can protect their US assets from creditors while they seek to sell their holdings or to restructure in their home countries. It has become a common tool for shipping companies, whose vessels face seizure by unpaid creditors in ports around the world.
Dozens of Hanjin ships carrying more than half a million cargo containers were denied access to ports around the world because of uncertainty about who would pay docking fees, container-storage and unloading bills.
Judge John Sherwood, who oversaw Hanjin’s US bankruptcy proceeding, signed off on its chapter 15 petition, prodding stranded ships to dock in US ports and unload their cargo.
US creditors fought to hold on to any proceeds from the sale of Hanjin’s US assets instead of sending them to South Korea. But Judge Sherwood ultimately ruled that repatriating sale proceeds and administering US creditors’ claims in South Korea would be the most fair and efficient way forward for Hanjin.
Hanjin’s troubles can be traced to the global financial crisis in 2008 and a more recent downturn in trade, though some analysts say part of the blame falls on costly long-term ship leases its top managers agreed to when global shipping was booming. (WSJ)