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Hanjin has so far raised only $220 million towards repayments to more than 180 creditors.
Hanjin has so far raised only $220 million towards repayments to more than 180 creditors.

South Korea Shipper Struggling to Pay Creditors

South Korea Shipper Struggling to Pay Creditors

South Korea’s Hanjin Shipping, which faces credit claims totaling around $10.5 billion, has raised only a fraction of that amount from asset sales since its bankruptcy last August.
The company, formerly one of the world’s top 10 in the container shipping market has been selling ships, stakes in seaport terminals and other assets in the past year. The proceeds are earmarked to repay creditors, whose claims must pass muster with a South Korean court, GTNews reported.
However, in court papers recently filed in the US trustees overseeing the carrier’s bankruptcy proceedings in Seoul said that the sell-off of assets has so far raised only $220 million towards repayments to Hanjin’s more than 180 creditors.
Hanjin filed for chapter 15 bankruptcy protection in the US within days of filing for receivership in South Korea. The company originally aimed to maintain its operations through a restructuring but eventually succumbed to its debt load. A Korean judge subsequently ordered Hanjin’s liquidation in February this year.
Filing for chapter 15 enables cash-strapped companies to protect their US assets from creditors while they seek to sell their holdings or to restructure in their home countries. It is increasingly employed by shipping companies, whose vessels face seizure by unpaid creditors in ports around the world.
In the wake of the bankruptcy dozens of Hanjin ships were denied access to ports around the world due to the uncertainty over who would pay docking fees, container-storage and unloading bills.
Last week, Hanjin admitted that it could not confirm when distributions to creditors would begin, but said they would be carried out according to a plan worked out in South Korea and complying with Korean bankruptcy law.
Judge John Sherwood, who oversaw Hanjin’s US bankruptcy proceeding, signed off on its chapter 15 petition and cleared the way for stranded ships to dock in US ports and unload their cargo.
US creditors petitioned to hold on to any proceeds from the sale of Hanjin’s US assets instead of sending them to South Korea. However, they were overruled by Judge Sherwood on the basis 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 demise reflects the problems of the shipping industry as a whole since the 2008 financial crisis, with its rivals also struggling and a number of mergers and consolidations underway. Recently, Athens-based Petrofin Global Bank Research reported that lending by the world’s top 40 banks to the sector fell to $355.2 billion at the start of 2017, down $42.5 billion on a year earlier and the lowest level for 10 years.

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