Hanjin Shipping Files for Court Receivership as Creditors Withdraw Backing

A number of reports have indicated Hanjin vessels are now being turned away at ports

Hanjin Shipping Co. (Hanjin), South Korea's biggest shipping firm and the world's seventh largest box carrier, Wednesday filed for court receivership, paving the way for what would be by far the biggest ever container shipping failure.

After a particularly troubled year, banks led by state-run Korea Development Bank (KDB) rejected the operator's latest funding proposals and withdrew their backing.

A Seoul Central District Court Judge told Reuters that a request by Hanjin for its assets to be frozen will be granted.

"The government will swiftly push forth corporate restructuring following the rule that companies must figure out how to survive and find competitiveness on their own while taking responsibility," said Finance Minister Yoo Il-ho.

As of the end of June, the company is understood to have debts of 6.1 trillion won ($5.4 billion).

Bongiee Joh, managing director of the Korea Shipowners' Association, said: "Hanjin must do everything it can to protect its clients' cargoes and make sure they are not delayed to their destination, by filing injunctions to block seizures in all the countries where its ships are located."

However, a number of reports have indicated Hanjin vessels are now being turned away at ports around the world, while court documents in Singapore show one of its vessels, Hanjin Rome, was arrested on Monday.

Hanjin Sooho is also reported to have been detained in Shanghai.

The country's other major carrier, Hyundai Merchant Marine (HMM), is also undergoing debt restructuring but according to South Korea's Financial Services Commission will look to acquire healthy Hanjin assets such as its profit-making vessels.

"The unprecedented scale of the potential bankruptcy of Hanjin Shipping would have significant ramifications for the liner industry. Hanjin Shipping currently operates 98 ships for 609,500 teu, of which 61 units for 335,500 teu are chartered from various owners," Alphaliner wrote in its latest weekly report.

"Among the key owners with ships currently on charter to Hanjin are Seaspan, Danaos, Conti Reederei, Ciner, Kukje Maritime Investment Corp. (KMarin), Rickmers and PIL."

Earlier this year a Hanjin-HMM merger was mooted and as Ship & bunker at the time, Drewry Maritime Equity Research (Drewry) said it would boost their chances of survival.