Hanjin Wins U.S. Bankruptcy Shield, Allowing Cargo Off Ships
(Bloomberg) -- Hanjin Shipping Co. won court protection for its ships bound for the U.S., allowing the company to unload four vessels without fear of having them seized by creditors.
U.S. Bankruptcy Judge John K. Sherwood on Friday granted the Seoul-based company protection under Chapter 15 of the Bankruptcy Code, which shields foreign companies from lawsuits by U.S. creditors while they reorganize in another country. Sherwood had given the company provisional protection on Sept. 6. His ruling Friday broadened that legal shield and extended its length.
The decision by the court in Newark, New Jersey, will allow goods on at least four ships to come into port in the U.S. Worldwide, an estimated $14 billion worth of goods has been stuck on Hanjin ships, which ferry goods for companies including Nike Inc. and Hugo Boss AG. Companies are seeing their cargo held up as they prepare products for sale during the Thanksgiving and Christmas holidays.
“I want them to come and I want them to get rid of their cargo and I want them to go,” Sherwood said in court.
Hanjin will be able to start unloading cargo from vessels in the U.S. following the court order, a Hanjin Shipping spokeswoman in Seoul said by phone.
South Korea’s government said that while it will take time to fully resolve the situation, it expects to slowly start seeing some some improvement. Hanjin’s ships are expected to start unloading from midnight Saturday at Long Beach terminal, the government said in an e-mailed statement Saturday.
The U.S. relief was granted over an objection from two terminal operators that warned of docking disasters, with one citing the fear that Hanjin ships would be stuck in its berths, unable to afford the fuel needed to depart.
The shipping company petitioned the U.S. court for protection to stop fuel providers, rail companies, trucking companies, port pilots and others from making a grab for assets. The company said in court papers that World Fuel Services got an arrest order from a California court for one of Hanjin’s vessels, and that two other firms, Hastay Marine and Montemp Marine, applied to seize assets, citing unpaid rent on two vessels.
Samsung Electronics Co. supported the protection for Hanjin, saying two of its ships off Long Beach were unable to dock and unload around $38 million of its cargo, including refrigerators.
Samsung said that to get products to market ahead of the holiday shopping season, it might have to pay as much as $8.8 million, chartering planes and passing along the cost to U.S. consumers.
The case is Hanjin Shipping Co. Ltd., 16-27041, U.S. Bankruptcy Court, District of New Jersey (Newark).