The collapsed Hanjin Shipping Co Ltd. could not compete against global rivals that were supported by their governments, the chairman of its parent firm told a South Korean parliamentary hearing today, Reuters reported. The world's seventh-largest container shipper sought court receivership in late August after its creditors led by a state bank halted further support, stranding $14 billion in cargo and sending waves through global trade networks. "Hanjin Shipping lost the game of chicken played among large shippers," Hanjin Group chairman Cho Yang-ho told the hearing. Hanjin Shipping is due to submit a rehabilitation plan to a Seoul court in December, although many in the industry expect it to be liquidated in the largest-ever bankruptcy in an industry battered in recent years by overcapacity and sluggish trade.
Pacific Andes Resources Development (PARD), a Singapore-listed division of the beleaguered Ng-family controlled group, has filed for chapter 11 protection in the U.S., UnderCurrentNews.com reported on Friday. The filing comes after a creditor, Malayan Banking Berhard, known as Maybank, filed in the supreme court of Bermuda to wind up PARD, in addition to an application for the appointment of provisional liquidators over the company. These filings have the support of Rabobank, another lender to the group. Pacific Andes had previously applied for protection under the Singapore companies act while a restructuring process supervised by the Singapore court could proceed. On Sept. 26, the Singapore high court allowed the group’s application to extend the protection in order that the restructuring process could continue.
A bankruptcy judge on Friday expressed concern that Hanjin Shipping Co.’s efforts to cobble together a restructuring plan may be moving too quickly for U.S. creditors, the Wall Street Journal reported on Saturday. The South Korean shipping company hopes to file a plan of reorganization with a Korean court by Dec. 23, court papers show, about four months after it sought protection there and in the U.S. “It’s very condensed,” Bankruptcy Judge John Sherwood said on Friday at a status hearing in the company’s U.S. bankruptcy proceeding. “I’m just concerned that U.S. creditors will be asleep at the wheel, because it’s a fast process.” Once Hanjin’s restructuring plan is on file, it will then be up to the South Korean court to decide whether to accept the plan or to let the company go under. Read more. (Subscription required.)
In related news, failed South Korean container carrier Hanjin Shipping Co. Ltd. said on Friday that cargo owners were withholding up to $80 million in payments for completed shipments, complicating the company's ability to move stranded freight, Reuters reported. Hanjin lawyers said that many cargo owners had received their goods on credit but have yet to pay the shipping company. An attorney for Ashley Furniture Industries, a Wisconsin-based furniture maker, told Friday's hearing the company anticipated that costs related to Hanjin's failure would eventually exceed what it owed for past shipments. Like many retailers and other cargo owners, Ashley has been stuck paying to get its cargo from the dockside, even though Hanjin had been paid to deliver it to an inland destination. In addition, many retailers and other cargo owners have complained they have been stuck with empty Hanjin containers that ports have been unwilling to take back. Read more.
Lightstream Resources Ltd. is seeking court protection from creditors after failing to win enough support for a restructuring plan meant to cut debt at the Canadian oil driller by $904 million, Bloomberg News reported yesterday. The company plans to make a court filing under Canada’s Companies’ Creditors Arrangement Act on Sept. 26, Calgary-based Lightstream said Monday in a statement. The filing had been contemplated as an alternative to a proposal made in July to hand control of the recapitalized company to its highest-ranked bondholders. Unsecured lenders and shareholders would have received small stakes. Hedge fund Mudrick Capital Management LP, an unsecured noteholder, opposed the swap because it would have awarded equity to existing shareholders. Mudrick also said that a previous restructuring had bumped the fund down the capital structure, depriving it of a larger stake in the company under the July plan. Mudrick and FrontFour Capital Group LLC sued Lightstream after a 2015 debt swap gave a higher claim on the producer’s assets to distressed-debt investors Apollo Global Management LLC and Blackstone Group LP’s GSO Capital. The hedge funds said that they shouldn’t have been left out of that deal. Read more.
The National Retail Federation and other U.S. trade groups are urging the Commerce Department to work with the South Korean government to resolve the Hanjin Shipping Co. crisis, which stranded an estimated $14 billion of goods at sea, Bloomberg News reported yesterday. Last month’s bankruptcy of Hanjin, which moves huge containers of products to the U.S. from Asia, has roiled supply chains and delayed shipments of everything from T-shirts to televisions. Companies are concerned that their goods may be seized by Hanjin’s creditors once the ships dock, the organizations wrote in a letter to Commerce Secretary Penny Pritzker.
Takata Corp. shares fell 12 percent in Tokyo trading as bidders for the air-bag maker were said to consider the possibility of some form of bankruptcy proceedings for the Japanese company behind the auto industry’s biggest ever safety recall, Bloomberg News reported today. Bidders for Tokyo-based Takata have been asked to submit their proposals by early this week, and suitors include Carlyle Group LP, which is working with Chinese-owned air-bag manufacturer Key Safety Systems Inc.; Daicel Corp., a Japanese manufacturer of air-bag inflators that’s jointly bidding with Bain Capital; and KKR & Co. Some of the bidders are considering the possibility of bankruptcy proceedings for Takata as an option to mitigate liabilities. Takata aims to shortlist two to three candidates by October.
