The South Korean court handling Hanjin Shipping Co’s receivership cast doubt on the container carrier’s ability to survive a restructuring, news reports said, as 13 Hanjin ships crowded waters outside the nation’s biggest port.
South Korea’s Yonhap news agency yesterday reported that, according to the Seoul Central District Court, a rehabilitation plan for the world’s seventh-largest container carrier is “realistically impossible” if top priority debt such as backlogged charter fees exceed 1 trillion won (US$896 million).
Hanjin, which filed for court receivership late last month, must submit a rehabilitation plan in December that creditors owed billions of dollars will be called to agree to.
Hanjin has begun returning chartered vessels to their owners and is trying to secure funds to help unload ships.
An estimated US$14 billion in cargo was initially trapped on its ships around the world, creating havoc ahead of the crucial holiday shopping season.
Thirteen Hanjin container ships were waiting in international waters outside Busan Port, according to latest Hanjin data, as South Korea’s largest port struggled to accommodate vessels denied entry elsewhere and forced to sail home to South Korea.
“It’s a highly abnormal situation. Time is money for a shipper, so the more ships wait, the more losses,” a Busan Port Authority spokeswoman said.
“Some ships are waiting because they cannot leave for their destination,” she said.
At the Hanjin Newport section of Busan port, 78.6 percent of container capacity was filled as of yesterday morning, higher than the 60 percent preferred for efficient operation, the spokeswoman said. Of about 33,000 containers at Hanjin Newport, about 40 percent held cargo.
Busan is one of a handful of major global ports where Hanjin ships can freely unload cargo without threat from creditors.
The South Korean Ministry of Maritime Affairs and Fisheries said earlier this month that Busan and Incheon port authorities will guarantee payments for most services offered to Hanjin Shipping vessels.
Hanjin was granted stay orders to protect its ships from seizure in South Korea, the US, Japan, Britain and provisionally Singapore earlier this month and is applying for stay orders elsewhere. However, dozens of ships remained anchored off ports while Hanjin tries to secure funds to unload cargo.
With debt of about 6 trillion won at the end of June and the South Korean government’s unwillingness to mount a rescue, expectations are low that Hanjin Shipping will survive.
Top priority debt means claims for public interests, which are paid first to creditors and include cargo owners’ damages and unpaid charter fees, Yonhap reported, citing the court.
Backlogged charter fees that occurred after Hanjin Shipping’s court receivership have topped 40 billion won, while cargo owners’ claims for damages are expected to begin in earnest after three to four weeks have passed from original delivery schedules, the report said.
Court officials were not immediately available for comment.
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