Hanjin wins interim protection in US

Workers at the Hanjin Incheon Container Terminal in the South Korean capital Seoul. Hanjin, one of the world's biggest shipping lines, filed for bankruptcy protection last week in Seoul.
Workers at the Hanjin Incheon Container Terminal in the South Korean capital Seoul. Hanjin, one of the world's biggest shipping lines, filed for bankruptcy protection last week in Seoul. PHOTO: AGENCE FRANCE-PRESSE

WASHINGTON • Hanjin Shipping has won a provisional ruling protecting its assets in the United States against creditors while the South Korean line proceeds with its reorganisation at home.

The US Bankruptcy Court in Newark, New Jersey, on Tuesday issued an interim provisional order on Hanjin's request and asked for lawyers in the case to file more information before a final hearing tomorrow, according to minutes posted on the court's website.

Hanjin filed a petition in the US on Sept 2, seeking recognition of its pending reorganisation in Seoul court.

The shipping line asked the court to protect its assets in the US against enforcement actions and seizure attempts by its creditors.

"There are innumerable parties that can arrest and levy on the debtor's property in the US," the company said in its request.

Samsung Electronics also filed support on Tuesday for Hanjin's petition, saying it has about US$38 million (S$51 million) in merchandise on two Hanjin vessels, off the Californian coast, that are not able to dock without a US court order protecting the company against creditors trying to seize the cargo.

The merchandise includes refrigerators and washing machines that Samsung cannot unload without bankruptcy court protection for Hanjin, the electronics maker said.

Hanjin, one of the world's biggest shipping lines, filed for bankruptcy protection last week in Seoul. That has created a bizarre situation on the high seas for 85 Hanjin ships that have been effectively marooned offshore as ports in the US, Asia and Europe have turned the company's ships away.

The worry is that Hanjin ships will not be able to pay port fees or that their contents might be seized by creditors, which would disrupt port operations.

The South Korean shipping company operates 97 container ships, the giant workhorses of global trade that deliver everything from computers and clothing to household appliances and toys.

The global shipping disruption comes just as companies are sending off merchandise to fill shelves and warehouses for the year-end holiday season.

"Our ships can become ghost ships," said Mr Kim Ho Kyung, a manager at Hanjin Shipping's labour union. "Food and water are running down in those ships floating in international waters."

On Tuesday, the South Korean authorities rushed to piece together a capital injection, after the Ministry of Oceans and Fisheries estimated Hanjin Shipping needs more than 600 billion won (S$741 million) to cover unpaid costs.

The firm will provide 100 billion won, including 40 billion won from chairman Cho Yang Ho, to help contain disruptions in the supply chain, while the government was urged to offer 100 billion won in low-interest loans.

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A version of this article appeared in the print edition of The Straits Times on September 08, 2016, with the headline 'Hanjin wins interim protection in US'. Print Edition | Subscribe