As anticipated in our client alert dated September 2, 2016, on September 2, 2016, Hanjin Shipping Co. Ltd. filed for protection in the United States under Chapter 15 of the Bankruptcy Code. Hanjin, one of the world’s largest container lines, is currently undergoing rehabilitation proceedings in South Korea, and the U.S. proceedings were commenced to provide assistance and cooperation to the South Korean proceedings. According to counsel to Hanjin, recognition of the Korean proceedings has already been granted in both the U.K. and Japan.
A hearing was held in the Bankruptcy Court for the District of New Jersey on September 6, 2016 with respect to certain provisional relief requested by Hanjin, including enforcing the Korean provisional stay and commencement orders and applying the automatic stay within the territorial jurisdiction of the United States. At the hearing, a number of Hanjin’s creditors expressed concerns with Hanjin’s lack of a strategic plan to allow for the free flow of goods. The bankruptcy judge heard oral argument from constituencies including retailers seeking protocols for the payment and release of their goods, terminal operators, railways and other contract counterparties concerned with continuing to provide services to Hanjin without adequate assurances of payment as well as maritime lienholders.
At the conclusion of the hearing, the bankruptcy court entered an interim provisional order and scheduled a continuation hearing for Friday, September 9, 2016 at 10:00 a.m. Notably, the interim order enforces the automatic stay and allows vessels to come to port without the fear of arrest, and also prohibits contract counterparties from terminating contracts with Hanjin due solely to its insolvency. In addition, the Bankruptcy Court ordered that Hanjin’s vessels not leave U.S. ports until after the continuation hearing where the Court will determine how best to provide adequate protection to lienholders.
Seward & Kissel is continuing to monitor all developments. Various issues have yet to be resolved, and creditors will likely be required to carefully consider all options in dealing with Hanjin’s rehabilitation. As such, we would encourage affected creditors to seek guidance in the near term to best protect their position and maximize their recoveries. Seward & Kissel is available to assist you in your Hanjin-related inquiries. Please contact Lawrence Rutkowski at 212-574-1206 or rutkowski@sewkis.com; Bruce Paulsen at 212-574-1533 or paulsen@sewkis.com; John Ashmead at 212-574-1366 or ashmead@sewkis.com; or Robert Gayda at 212-574-1490 or gayda@sewkis.com.
