Hanjin Shipping files for receivership after creditors refuse to provide further funding

Various industry sources have reported that South Korean company Hanjin Shipping has filed for receivership after its creditors refused to provide further funding to the indebted firm. Ports from China to Spain have reportedly denied access to the company’s vessels.

Banks led by state-run Korea Development Bank (KDB) withdrew backing for the container carrier on August 30, stating that a funding plan by its parent group was inadequate to tackle debt that stood at $5bn at the end of 2015.

The company faces a cash shortage after failing to persuade key lenders to reschedule debt under a new restructuring plan.

Hanjin’s board unanimously agreed to make the court filing at a meeting on August 31, a company spokesman said. The court will now decide whether Hanjin Shipping should remain as a going concern or be dissolved.

Shares of Hanjin remain suspended in Seoul after falling by as much as 29%. The company, which is the world’s seventh-largest container line, has been unprofitable for four of the last five years.

Hyundai Merchant Marine Co Ltd (HMM), the country’s second-largest shipping line, will look to acquire Hanjin’s healthy assets, including profit-making vessels, overseas business networks and key personnel, South Korea’s Financial Services Commission said.

Shares of HMM jumped by as much as 22% after Korea’s financial regulator said the firm may buy some of Hanjin’s assets. However, HMM is also in the process of a voluntary debt restructuring, as South Korea’s shipping and shipbuilding industry has been one of the hardest-hit by a prolonged downturn in global trade.

Source: Various