Court says Hanjin Shipping rehab plan 'realistically impossible'

A general view of the Hanjin Incheon Container Terminal in Seoul.
A general view of the Hanjin Incheon Container Terminal in Seoul. PHOTO: AFP

SEOUL (REUTERS) - The South Korean court overseeing Hanjin Shipping's receivership said a rehabilitation plan is "realistically impossible" if top priority debt such as backlogged charter fees exceed 1 trillion won (S$1.22 billion), South Korea's Yonhap newswire reported on Wednesday (Sept 21).

Hanjin Shipping, the world's seventh-largest container carrier, filed for receivership late last month in a South Korean court and must submit a rehabilitation plan in December.

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 be able to 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 Seoul Central District Court.

Backlogged charter fees that occurred after Hanjin Shipping's court receivership began on Aug 31 have topped 40 billion won, while cargo owners' claims for damages are expected to begin in earnest after 3-4 weeks have passed from original delivery schedules, the report said.

Court officials were not immediately available for comment.

 

Hanjin has begun returning chartered ships to their owners and is trying to secure enough funds to help unload an estimated US$14 billion in cargo initially trapped on its ships around the world.

The company had a total of 141 vessels, including 97 container ships as of early September. Out of the 97 container ships, 60 were chartered and 37 owned by Hanjin.

Shares in Hanjin plunged more than 20 per cent to a record low after the report, which lent support to the view the company will slide into liquidation.

Rival shipping company Hyundai Merchant Marine Co Ltd, which has been touted as a potential vehicle to buy Hanjin assets, surged 16 per cent to a near two-week high.