[Updated] Court Calls for More Hanjin Funding
A South Korean court presiding over Hanjin Shipping's receivership has asked the firm's lead creditor for fresh funds, warning the container shipping company needs financial support this week to normalize operations.
However, the lead creditor bank for South Korea's Hanjin Shipping said it will be difficult to accept a court request to provide the firm new funds - funds seen vital to resolving the problem of cargo stranded around the world.
A Korea Development Bank spokesman said providing extra funding to Hanjin could lead to breach of trust issues as there was no certainty that additional support would help the company survive. The bank is still considering the request and has not made a final decision yet, he said.
The world's seventh-largest container carrier and its clients are scrambling to move an estimated $14 billion worth of cargo off ships that are no longer operating normally in the wake of its collapse last week.
More than half of Hanjin's ships have been blocked from docking at ports and denied service from lashing firms on fears they will not be paid while some vessels have been seized by creditors. With expectations high that Hanjin will eventually be liquidated, there is little clarity on just how the problem of cargo stranded ahead of the peak-year end shopping season will be resolved.
The Seoul Central District Court did not say how much it had requested from lead creditor Korea Development Bank but noted that plans by Hanjin Shipping's parent firm to raise 100 billion won ($90 million) to fund the unloading of cargo were inadequate.
"It is unclear when the 100 billion won financial support package announced by Chairman Cho Yang-ho and Hanjin Group can be executed and this is also far short of the amount needed to normalize Hanjin's operations," the court said.
A Korea Development Bank spokesman said he is checking whether the bank has received the court's request. He declined additional comment.
South Korean government officials have also said government-backed creditors are ready to provide a separate 100 billion won in funds if Hanjin Group, the parent firm, provides collateral. Hanjin Group is considering the offer. The Seoul court said, however, that even if this came through the shipper needed more.
South Korea plans to deploy more than 20 container ships starting next week for routes to the United States, Europe and Southeast Asia as substitutes for Hanjin ships in a bid to contain the fallout.
"As the head of the government's economic team, I feel grave responsibility about the confusion and concern on the ground level despite preparations through contingency planning," Finance Minister Yoo Il-ho said.
Hanjin is seeking stay orders to prevent its ships from being seized by creditors in 43 different countries, he said. A U.S. court on Tuesday granted temporary protection to Hanjin, allowing the firm's ships to dock at U.S. ports without the fear of them being seized.
The U.S. court 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. The South Korean firm has filed for Chapter 15 bankruptcy protection in the United States.
"It's a logistical mess," U.S. Bankruptcy Judge John Sherwood, who gave the order, said.
Samsung Electronics said goods worth $37.9 million for its television and appliances businesses - parts and finished products - were stuck aboard two Hanjin ships. The firm said it may have to charter at least 16 planes to move the goods if the cargo cannot be unloaded immediately, costing the tech giant at least $8.8 million.
"The upcoming months are critically important to retailers, particularly ahead of Black Friday and the holiday shopping season," Samsung Senior Vice President Ahn Jung-tae said in a court filing.
HP Inc said in a separate filing on Monday it is willing to pay right away to get its cargo off Hanjin's vessels and that delays in unloading its goods could result in loss of market share.