Hanjin Scrambles to Prevent Ship Seizures
By Joyce Lee and Keith Wallis
SEOUL/SINGAPORE, Sept 5 (Reuters) – South Korea’s Hanjin Shipping plans to take legal action in jurisdictions worldwide to prevent its vessels being seized, as more of its ships were blocked from docking at ports in the wake of its collapse.
As of Monday, 79 Hanjin ships including 61 container ships and 18 bulk carriers have been denied port access, according to South Korea’s maritime ministry. That figure includes one vessel seized in Singapore by a creditor, a company spokeswoman said. Hanjin has 141 ships, of which 128 are operating.
At least three U.S. firms have launched legal action against Hanjin to seize vessels and other assets over unpaid bills.
Last week’s collapse of the world’s seventh-largest container shipper has caused deep anxiety among its clients over the fate of stranded cargo, and pushed up cargo rates. Whether Hanjin can fend off ship seizures will depend on the jurisdictions involved, lawyers said.
Drewry Maritime Research said in a note on Monday it was difficult to see how Hanjin can survive as customers look for alternative carriers. “It’s unlikely any would entrust their cargoes to Hanjin again,” it said.
A Hanjin bankruptcy would be the largest ever for a container shipper.
Hanjin vessels are currently carrying cargo worth 16 trillion won ($14.5 billion) belonging to some 8,300 cargo owners, the Korea International Trade Association said, adding that the carrier has unpaid bills of 610 billion won.
As part of its efforts to gain legal protection for its ships, Hanjin has filed a Chapter 15 petition in a U.S. bankruptcy court in New Jersey. It plans to pursue legal action in roughly 10 countries this week and later expand that to 43 jurisdictions, South Korea’s financial regulator said.
Many port authorities and service providers are demanding cash to work on Hanjin ships, the Hanjin spokeswoman said.
Its lead creditor, the state-run Korea Development Bank, met with officials of parent firm Hanjin Group to discuss its commitment to paying fees so stranded ships can enter ports, but did not reach a conclusion, a bank spokesman told Reuters.
Hanjin is likely to have more recourse against its ships being seized in countries which, like South Korea, have signed the United Nations-backed UNCITRAL Model Law on Cross Border Insolvency, which include the United States, United Kingdom, and Australia, lawyers said.
It was more uncertain what would happen in jurisdictions such as Hong Kong, China and Singapore that have not signed the Model law, they said.
SHARES RESUME TRADING
South Korea plans to direct Hanjin vessels to ports where ship seizures are disallowed so that cargo can be offloaded, its vice finance minister said on Monday.
Hanjin Shipping shares plunged 30 percent to a record low on Monday, ending 13.7 percent lower as trading resumed after being halted since Aug. 30 when banks pulled support.
The ship seized in Singapore, the Hanjin Rome, includes about 50 containers with components for a nuclear power plant under construction in the United Arab Emirates by a consortium led by Korea Electric Power Corp (KEPCO), according to a person with direct knowledge of the matter.
The person, who was not authorised to speak to the media about cargo data, declined to be identified.
KEPCO said it did not anticipate a significant impact on construction as it does not expect the seizure to last long and has ample construction materials at the reactor site.
Hanjin accounts for 7.8 percent of trans-Pacific trade volume for the U.S. market.
Rival Hyundai Merchant Marine Co is in talks with firms such as Samsung Electronics Co and LG Electronics to carry their cargo, South Korea’s Financial Services Commission said. ($1 = 1,106.9000 won)
(Additional reporting by Hyunjoo Jin, Yun Hwan Chae and Se Young Lee in Seoul; Writing by Tony Munroe; Editing by Edwina Gibbs and Muralikumar Anantharaman)
(c) Copyright Thomson Reuters 2016.
Sign up for our newsletter
Be the First
Join the 62,374 members that receive our newsletter.
Have a news tip? Let us know.