Korea’s largest shipping company Hanjin Shipping has filed for bankruptcy protection in the US, with more than 70 of the firm’s ships blocked, stranded and denied entry at major ports around the world and its creditors taking control of some of its assets,
Under the chapter 15 bankruptcy code, Hanjin creditors will not be able to seize the company’s overseas assets including in the US. However, the jurisdiction of the US court protection does not extend to South Korea, where a Seoul court has begun its receivership for Hanjin. The Korean company filed for Korean court protection last week.
As losses increase following the debt fallout of Hanjin, and its partners and contractors face business disruptions at sea, the government is drawing criticism from the market for not coming up with a proper contingency plan after its main creditor – the state-run Korea Development Bank -- refused to extend financial support to the company.
Economic-related state agencies, including the Finance Ministry and Oceans and Fisheries Ministry, held emergency meetings to deal with the repercussions, pledging support to Hanjin’s small and medium-size logistics partners.
However, the government remains adamant that Hanjin’s problems were its owner’s responsibility in the first place.
Yim Jong-yong, the chairman of the Financial Services Commission, told reporters Monday that Hanjin’s owners including Korean Air Chairman Cho Yang-ho should take full responsibility, reiterating the Finance Ministry’s stance on Hanjin’s court protection filing.
“Hanjin’s largest shareholder Cho Yang-ho should be socially responsible and seek to actively resolve these logistics problems,” Yim told local media.
He added that it would be socially and morally unacceptable if the government helps out the company when its owner avoids accepting responsibility, stressing that this goes against Cho’s earlier pledge that he will do all he can to make Hanjin financially solvent.
Cho has a 17.81 percent stake in Hanjin KAL, which owns Korean Air. The country’s flagship carrier was the biggest shareholder of Hanjin Shipping, according to a regulatory filing.
Yim’s remarks follow those made by Finance Minister Yoo Il-ho, who said that the government will deal with companies under creditor-led restructuring programs by the book and those that do not come up with reasonable self-rescue plans will not receive any state support.
The Finance Ministry backed the creditor’s decision, despite concerns raised by the Ministry of Oceans and Fisheries, saying that a court protection filing by Korea’s biggest shipper is “not only unprecedented, but also would cause a disruption in logistics.”
By Park Hyong-ki (firstname.lastname@example.org)