U.S. Judge Grants Hanjin Bankruptcy Protection
07 Sep 2016
Korean shipping line Hanjin Shipping Co Ltd won an order on Tuesday from a U.S. judge extending bankruptcy protections so its vessels can dock at U.S. ports without fear creditors will try take actions against the ships as they have in other countries.
U.S. Bankruptcy Judge John Sherwood approved a motion by the world’s seventh largest container carrier that sought to extend to the United States the protection from creditors that it has under receivership in South Korea.
The move prevents U.S. creditors from taking actions against the company’s ships and other assets.
The order is temporary and Hanjin will need to return to court on Friday for a final order after talks with stakeholders to try to resolve complex problems involving ports, terminal operators and retailers, Sherwood said.
“It’s a logistical mess,” Sherwood said.
Hanjin filed for what is known as Chapter 15 bankruptcy protection in the United States and sought an order recognizing proceedings in South Korea and protecting its U.S. assets.
Some Hanjin vessels have not docked due to uncertainty about the company’s finances.
As of Monday, 70 Hanjin ships had been denied access to ports and three had been seized in Singapore and China by creditors through court orders.
Sherwood said he would sign the interim order after a lawyer for Hanjin said its parent company would raise $100 million for the shipping line to meet its cargo commitments.
Hanjin’s bankruptcy comes as U.S. retailers are anticipating shipments of Asian-made merchandise for the holiday shopping season.
In court papers on Monday, HP Inc (HPQ.N), formerly Hewlett-Packard Co, said it would be willing to pay right away to get its cargo off Hanjin vessels, including ones waiting to dock in U.S. West Coast ports to avoid “irreparable harm” to its business.
HP said the longer some of its products like personal computers and printing supplies made in China stay offshore, the greater the risk to its sales.
Some products must get to stores quickly because of promotions, HP said, noting it has goods aboard Hanjin ships waiting to dock in Seattle and Long Beach, California.
“Failure to place these products on shelves in a timely manner will likely result in loss of market share,” HP said, arguing the goods are its property and are not subject to a bankruptcy stay.
HP said its products are in more than 500 Hanjin shipping containers, with 142 destined for or on their way to the United States.
To get its cargo off Hanjin’s vessels, HP proposed placing funds in an account controlled by the shipping line’s U.S. bankruptcy counsel.
The funds would pay to deliver or remit cargo. Ports and stevedores would get a lien on the funds for fees and costs.