Hanjin Bankruptcy update from North

North of England P&I has noted that, since its previous update on Hanjin Shipping (December 14th 2016), the Seoul Central District Court gave notice on February 2nd of its decision to discontinue the rehabilitation proceedings of Hanjin Shipping, because Hanjin Shipping’s liquidated value is greater than its value as a going concern. The Court’s decision will become final on February 17th should no objection be filed by an interested party. If any objection is filed then the effective date of discontinuation will be postponed pending the Court’s review of whether or not the rehabilitation proceedings should be discontinued.

Once the discontinuation of the rehabilitation proceeding becomes effective, the Court can declare bankruptcy — converting the rehabilitation proceeding to a bankruptcy proceeding. The Court would then appoint a trustee to dispose of Hanjin Shipping’s remaining assets and distribute the proceeds from the sale of those assets to Hanjin Shipping’s creditors.

Should this conversion occur, creditors who have filed their claims in the rehabilitation proceeding will not need to re-file. However, North advises its Members that:

a) If claims have been filed in a foreign currency, then a confirmatory action in respect of such claims will have to be filed again in the bankruptcy proceeding.

(b) If claims are not included in the list of claims accepted by the receiver in the rehabilitation proceeding, then they may be denied by the trustee and the creditor will need to file a confirmatory action again.

(c ) Common benefit claims will be treated as estate claims in the bankruptcy proceedings, which have priority over other claims.

In the event that the Court does not convert the rehabilitation proceeding into a bankruptcy proceeding, Hanjin Shipping’s creditors could still seek to have it declared bankrupt. In that case, all creditors would need to file their claims again in order to participate in any distribution from the bankruptcy estate.

North says that “the current position of the rehabilitation proceedings remains rather fluid and we therefore recommend that Members discuss any claims they may have with their usual FD&D case-handler”.