A court in South Korea has declared the bankruptcy of Hanjin Shipping, after two weeks of appeals that ended Friday, bringing to a close 40 years of the company’s history as a leading shipping line and leaving challenges for the industry.
The demise of the company -- once the largest shipping company here and the world’s seventh biggest -- began in 2008 in the midst of the financial crisis.
Hanjin and other local shippers suffered from falling freight rates caused by an oversupply of ships and slow demand.
Its financial losses piled up and the liner was put under court receivership in September 2016, as its creditors led by the state-run Korea Development Bank rejected its self-rescue plan.
Earlier this month, the Seoul Central District Court said that it had decided to end the debt rehabilitation scheme for Hanjin, as liquidation would bring more value than rehabilitating the shipping company.
A government official from the Ministry of Oceans and Fisheries said Wednesday that the government would continue to carry out utmost efforts to minimize the repercussion of Hanjin’s bankruptcy.
As part of its efforts, the South Korean government said it has allocated 6.5 trillion won ($5.6 billion) to support the troubled shipping industry, including creating a shipping fund worth 1 trillion won ($873 million) to buy container ships from troubled liners, such as Hyundai Merchant Marine, and a global ocean fund worth 1 trillion won that would be used for securing ports and terminal.
The government also said that it has helped other local companies absorb Hanjin’s assets to maintain the compatibility of the country’s shipping industry.
HMM, now the country’s biggest shipping company, bought a 20 percent stake in Hanjin’s cargo container terminal at Long Beach California earlier last month, while Swiss shipping group Mediterranean Shipping bought a 80 percent stake of the $72.5 million terminal.
A newly created local container line, SM Ship Management, bought Hanjin’s Asia-US routes for 27.5 billion won.
With the bankruptcy officially announced, the liquidation of Hanjin, estimated at 1.79 trillion won, has begun. The company’s remaining assets will be sold and distributed among creditors.
The bankruptcy of Hanjin has left 1,469 employees, half of which are sailors, unemployed. The government said Wednesday that about 700 of them have so far found a job, with HMM and SM hiring 90 and 270 former Hanjin employees, respectively.