'Hanjin Shipping could be liquidated,' says Seoul bankruptcy court

By Park Si-soo

Hanjin Shipping “could face liquidation,” said Seoul’s bankruptcy court that is managing the debt-ridden Korean shipping company under court receivership.

Judge Kim Jung-man of the Seoul Central District Court made the remark on Tuesday during a closed-door meeting with government officials and Hanjin’s main creditors, according sources.

The comment marked the court’s departure from its earlier stance favorable to extending the firm’s lifeline by any means. Other comments made during the meeting were unknown.

While many say the remark reflects the seriousness of the situation facing the nation’s largest container-ship operator, others consider it a tactic to put additional pressure on Hanjin Group Chairman Cho Yang-ho to make a bigger commitment to saving its sinking affiliate.

Cho has decided to spend 40 billion won ($35.7 million) of his own money to help ease the company’s severe financial crunch, which has left dozens of its vessels seized or denied access to ports in many countries. But the sum is too small to normalize the company.

The court believes Hanjin needs at least 170 billion won to free cargo trapped in Hanjin-operated vessels around the world, and 600 billion won fully to solve the logistics disturbances and pay uncovered charter rates.

Meanwhile, Hanjin is working on a restructuring plan that calls for the drastic reduction of its owned fleet and returning most of the ships it charters to their owners, according to The Wall Street Journal.

Hanjin is considering several scenarios but focusing on one that involves Hanjin keeping up to 15 of its 37 ships, and returning to owners almost all the 61 chartered vessels, the paper said, citing an unidentified source. The plan needs the court’s approval to be implemented.

Industry insiders say if the plan is implemented, Hanjin will become a regional operator in Asia that will move a small amount of Korea’s exports.

Hanjin is now the world’s seventh-largest shipping line with 2.9 percent of total container capacity.