South Korean Carrier STX Pan Ocean Seeks Protection from U.S. Creditors
The bulk shipper STX Pan Ocean Co Ltd filed for protection under U.S. bankruptcy law on Thursday to shield its assets from creditors in the United States, less than two weeks after filing for court receivership in South Korea.
STX sought protection under Chapter 15 under the U.S. bankruptcy code with the federal bankruptcy courtin Manhattan.
The company had previously said it needed protection because it faced "a liquidity crunch" that left it unable to obtain sufficient funds to repay its debt, which recently totaled about 5.51 trillion won (now US$4.81 billion).
In Thursday's filing, two court-appointed administrators for STX said the company has struggled with a shrinking profit margin amid a decline in the value of dry bulk shipping contracts. They said STX has several long-term contracts that will prove profitable and around which it intends to reorganize.
The filing seeks recognition of the Korean proceeding as a "foreign main proceeding," and to halt a variety of existing and potential litigation and claims in the United States.
Non-U.S. companies use Chapter 15 to block creditors who want to file lawsuits or tie up assets in the United States.
The case is In re: STX Pan Ocean Co, U.S. Bankruptcy Court, Southern District of New York, No. 13-12046.
Copyright Reuters 2013.