Hanjin Shipping is Officially Bankrupt
A South Korean court on Friday pulled the plug on Hanjin Shipping Co., declaring it bankrupt and ordering the liquidation of a company that has led the country’s shipping industry for the past four decades.
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As reported by Reuters, a South Korean court declared Hanjin Shipping Co Ltd bankrupt on Friday, after ruling earlier this month that the firm's liquidation value would be worth more than its value as a going concern.
Hanjin Shipping, which had been the world's seventh-largest container shipper, applied for court receivership in late August after its creditor banks halted further support.
"The court will, through the bankruptcy process, make efforts so the maximum of debt repayment will be conducted in a way that is fair and balanced to the creditors," it said.
The court on Feb. 2 said it had decided to end the receivership process in favor of a bankruptcy.
District Court said in a statement it has chosen a bankruptcy administrator, and claims by creditors are due by May 1, 2017.
The first meeting of creditors will be held on June 1, 2017.
The BBC reported, for years, the global economic downturn had affected profits across the cargo shipping industry. It led to overcapacity, lower freight rates and rising debt levels.
The question was not whether a big shipping line would go under, but which one would be first. The questionable honour eventually fell to Hanjin, at that time South Korea's biggest shipper and number seven in the world.
Crippled with $5.4bn (£4.1bn) in debt in August 2016, the company failed to get any more money from its creditors. Hanjin went into receivership and applied for court protection.
There was still a chance for an investor or the government to come to the rescue yet it quickly became clear that any such hopes were futile.
"Stopping the credit line immediately results in an inability to purchase fuel, it immediately results in vessels not being able to go to port and it immediately results in all customers going to the competitors," explains Lars Jensen of Sea Intelligence Consulting.
What followed were long and painful months of sailors losing their jobs and investors losing their money.
The bankruptcy is the biggest ever to hit the container shipping sector in over 50 years of its existence and sent shockwaves through the industry and the wider supply.
With a 2.9% share of the global container shipping market Hanjin’s 96 boxships were left stranded at sea and outside ports when it filed for receivership with some $14bn worth of cargo onboard.