News breaking on Reuters reports that Hanjin Shipping Co Ltd have today said that it would seek court receivership after losing the support of its banks, as ports from China to 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.
Ports including those in Shanghai and Xiamen in China, Valencia, Spain, and Savannah in the U.S. state of Georgia had blocked access to Hanjin ships on concerns they would not be able to pay fees, a company spokeswoman told Reuters.
Another vessel, the Hanjin Rome, was seized in Singapore late on Monday by a creditor, according to court information.
After Hanjin applies for receivership, the court will decide whether it should remain alive as a going concern or be dissolved, a Seoul Central District Court judge told Reuters on Wednesday, declining to be named.
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.
Hyundai Merchant Marine is also in the process of a voluntary debt restructuring.
South Korea’s oceans ministry estimates a two- to three-month delay in the shipping of some Korean goods that were to be transported by Hanjin Shipping, and plans to announce in September cargo-handling measures which could include Hyundai Merchant Marine taking over some routes, a ministry spokesman said on Wednesday.
Hanjin would have difficulty operating even if a rehabilitation process is initiated, as the company would face lawsuits from creditors and clients, the cancellation of ship leases and attempts by creditors to size Hanjin’s vessels.
Shares in Hanjin Shipping have been suspended after plunging 24 percent on Tuesday.
11.42 – Hanjin Shipping issue a notice confirming they are to file for court receivership