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[HANJIN CRISIS] Hanjin Shipping faces possible court receivership
By 안성미Published : Aug. 30, 2016 - 14:34
[THE INVESTOR] Creditors of debt-ridden Hanjin Shipping decided on Aug. 30 to stop injecting funds to enable it to stay afloat, which may likely force the shipper to enter court receivership.
The creditor banks, which include state-run Korea Development Bank and KEB Hana Bank, unanimously decided to stop supporting South Korea’s largest container carrier during their emergency meeting, saying its latest self-rescue plan did not fulfill the requirements.
“Hanjin Shipping’s proposal fails to cover the insufficient amount of funds,” the KDB said in a statement following the decision. “The shipper also lacks willingness to normalize business and it is also uncertain whether normalization is possible.”
Lee Dong-geol, chairman of KDB, criticized Hanjin Group’s lack of efforts to inject more funds into its ailing shipping arm at a press conference held at the bank headquarters in Yeouido, Seoul.
Hanjin Shipping has been under a corporate rehabilitation program initiated by the creditors since May, which was set to end on Sept. 4. As creditors decided not to inject more funds before the due date, Hanjin Shipping is left with no option but to fall under court receivership.
Related story: Hanjin Shipping fallout has less impact on finance industry
The creditors demanded the shipper and its parent company Hanjin Group secure at least 600 billion won (US$536.58 million) as a prerequisite for them to continue their support.
However, Hanjin Shipping, in its fresh self-rescue plan, said it can inject only 400 billion won from its affiliates.
The creditors expressed disappointment with the proposal, claiming that the amount is “no different from the previous proposal.”
Creditors estimate the shipper needs at least 1 trillion won to 1.3 trillion won to pay back debt and operate its business.
Industry watchers are concerned the collapse of Hanjin Shipping will be a further blow to the already troubled shipping and shipbuilding industry, as well as to lenders that have extended significant amounts in bad loans to the industry.
If the ship carrier is dismantled, it could cause the local shipping industry a maximum of 17 trillion won in damages, according to a study by the Korea Shipowners’ Association.
By Ahn Sung-mi (sahn@heraldcorp.com)
The creditor banks, which include state-run Korea Development Bank and KEB Hana Bank, unanimously decided to stop supporting South Korea’s largest container carrier during their emergency meeting, saying its latest self-rescue plan did not fulfill the requirements.
“Hanjin Shipping’s proposal fails to cover the insufficient amount of funds,” the KDB said in a statement following the decision. “The shipper also lacks willingness to normalize business and it is also uncertain whether normalization is possible.”
Lee Dong-geol, chairman of KDB, criticized Hanjin Group’s lack of efforts to inject more funds into its ailing shipping arm at a press conference held at the bank headquarters in Yeouido, Seoul.
Hanjin Shipping has been under a corporate rehabilitation program initiated by the creditors since May, which was set to end on Sept. 4. As creditors decided not to inject more funds before the due date, Hanjin Shipping is left with no option but to fall under court receivership.
Related story: Hanjin Shipping fallout has less impact on finance industry
The creditors demanded the shipper and its parent company Hanjin Group secure at least 600 billion won (US$536.58 million) as a prerequisite for them to continue their support.
However, Hanjin Shipping, in its fresh self-rescue plan, said it can inject only 400 billion won from its affiliates.
The creditors expressed disappointment with the proposal, claiming that the amount is “no different from the previous proposal.”
Creditors estimate the shipper needs at least 1 trillion won to 1.3 trillion won to pay back debt and operate its business.
Industry watchers are concerned the collapse of Hanjin Shipping will be a further blow to the already troubled shipping and shipbuilding industry, as well as to lenders that have extended significant amounts in bad loans to the industry.
If the ship carrier is dismantled, it could cause the local shipping industry a maximum of 17 trillion won in damages, according to a study by the Korea Shipowners’ Association.
By Ahn Sung-mi (sahn@heraldcorp.com)
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