November 25, 2024

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[THE INVESTOR]  Hanjin Shipping will file for court receivership on Aug. 31, as its creditors refused to finance the debt-ridden container carrier. 

At the emergency meeting early in the morning, the board members of Hanjin Shipping reached a consensus to file for court protection at the Seoul Central District Court in the afternoon. 

On Aug. 30, the creditor banks -- led by state-run Korea Development Bank -- reached an agreement to stop funding the shipper, saying its latest self-rescue plan did not fulfill the requirements and the likelihood of normalization is uncertain.

With the decision, Hanjin Shipping, which has been under a corporate rehabilitation program initiated by the creditors since May, is left with no option but to fall under court receivership when the scheme ends on Sept. 4. 


Related story: Will Hanjin Shipping revive or dismantle?


“We tried our best to normalize the management. But the decision is regretful even though our overseas creditors and vessel owners decided to help us,” Hanjin Shipping and its parent Hanjin Group said in a statement after the decision.

According to reports, Hanjin Shipping’s debt exceeds 6 trillion won (US$5.35 billion) as of end-June.

Industry watchers are concerned the collapse of Hanjin Shipping will be a further blow to the already troubled shipping and shipbuilding industry, as well as to lenders that have extended significant amounts in bad loans to the industry.

If the ship carrier is dismantled, it could cause the local shipping industry a maximum of 17 trillion won in damages, according to a study by the Korea Shipowners’ Association.

By Ahn Sung-mi (sahn@heraldcorp.com)