Hanjin battles to hold onto ships

Bankrupt South Korean shipping company Hanjin is planning to take legal action globally in an attempt to stop the threat of seizure preventing its ships from docking.

Hanjin is expected to take legal action in the 10 most urgent jurisdictions (including Canada, Germany and the UK), eventually expanding it to 43 in total.

The number of Hanjin vessels being denied access to ports has risen to 79 – 61 container ships and 18 bulkers – out of 128 ships operating. Hanjin has another 13 that are not currently operating. One vessel in Singapore – the Hanjin Rome — has already been seized. The Hanjin Rome reportedly is holding about 50 containers with components for a nuclear power plant already under construction in the United Arab Emirates.

Hanjin has been given until November 25th by the Seoul Central District Court to submit a rehabilitation plan, but a liquidation is now seen as the most likely outcome. The question is whether that liquidation, should it ensue, will be orderly or disorderly.

The Korea International Trade Association indicated the scale of the problem for cargo owners when it said that Hanjin vessels were carrying cargo worth the equivalent of $14.5bn, belonging to about 8,300 cargo owners.

The UN-backed UNCITRAL Model Law on cross-border insolvency should protect some Hanjin vessels, but there are a number of significant non-signatories to this agreement – Hong Kong, China and Singapore being the most notable. Hanjin is apparently planning to direct vessels towards ports where, following its legal actions, ship seizures will have been disallowed by the courts.