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South Korean Court Declares Hanjin Shipping Bankrupt

By February 17, 2017 at 6:09 am
Hanjin Shipping Officially Declared Bankrupt (Photo : Getty Images)

It's the end of an era for Hanjin Shipping. A South Korean court has officially declared the company bankrupt on Friday.

The bankruptcy was a foregone conclusion, as the Seoul Central District Court had revealed on Thursday that it would be announcing the grave conclusion on February 17. Hanjin Shipping was previously given a two week grace period wherein it can appeal to creditors. But that time has ended and the company's liquidation is set to begin.

Judge Choi Woong-young told the court that liquidating the company was the best move as most of Hanjin's operations had already been sold. The court also said in a statement that a bankruptcy creditor has already been chosen and creditor claims are due on May 1, 2017.

"The court will, through the bankruptcy process, make efforts so the maximum of debt repayment will be conducted in a way that is fair and balanced to the creditors," the statement read.

It's a sad end for a company that used to be the seventh-largest container shipper in the world. However, Hanjin Shipping proved to be no match against the global recession that led to overcapacity, lower freight cost and rapidly rising debt levels. Part of its collapse was also due to mismanagement, with the widow of Hanjin's late former owner receiving the brunt of the blame.

Hanjin Shipping went into receivership sometime in mid-2016 and sought court protection. It wasn't enough though as the company's ships were stranded at sea, with ports refusing them entry. Other ships were arrested by creditors and Hanjin's sailors were soon laid off. Most of its vessels and prime terminal assets were also sold off to pay off debts.

However, insiders are saying that Hanjin Shipping's tragic end could bring stability back to the shipping industry. With a major player like Hanjin off the board, overcapacity might go down to sustainable levels.

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