South Korea’s Hanjin Shipping files for bankruptcy protection

Source: Wall Street Journal

South Korea’s Hanjin Shipping Co. filed for receivership Wednesday, as shipping companies world-wide grapple with overcapacity amid a slump in global trade. It would become the biggest company in the industry to go under if it is ordered to fold.

The filing with the Seoul Central District Court came just a day after the company’s creditors discontinued providing a lifeline after financial assistance of more than 1 trillion won ($896 million) failed to keep it afloat. The court will soon determine whether Hanjin, the country’s largest container operator by capacity and the eighth-largest in the world, should be liquidated or given a chance to survive after restructuring, the company said.

The company’s main creditor, state-run Korea Development Bank, withdrew its support on Tuesday, saying a funding plan by Hanjin’s parent group wasn’t sufficient to tackle the shipper’s debt, which stood at $5.5 billion at the end of June.

Hanjin — a unit of the conglomerate that controls Korean Air Lines Co. — has faced an acute credit crunch after posting a loss each year from 2011 to 2014, as slowing global trade and overcapacity depressed freight rates. It has been under a creditor-led debt restructuring program since May.

The Korean government said it wants Hanjin’s domestic rival, Hyundai Merchant Marine Co., to buy healthy assets from the troubled company. It rejected the idea of a merger.

Read more: http://www.wsj.com/articles/troubled-hanjin-shipping-to-sell-healthy-assets-to-rival-1472611190