In Port News 11/01/2017
Hanjin Shipping Co.’s U.S. creditors are fighting the company’s plans to sell its stake in one of the South Korean carrier’s key remaining assets: the port operator that runs the biggest container terminal in Long Beach, Calif.
In court papers filed Friday with the U.S. Bankruptcy Court in Newark, N.J., where Hanjin’s U.S. bankruptcy proceeding is unfolding, creditors who say their rights are being affected by the sale—including container lessors, insurance providers and the Port of Seattle—urged a judge to throw out, delay or modify the proposed sale.
Geneva-based Mediterranean Shipping Co., the world’s second largest container operator by capacity, has offered $78 million for the terminal. Hanjin has asked Judge John Sherwood to approve the bid, which it said was the highest and best offer following a competitive bidding process.
Hanjin owns a 54% stake in Total Terminals International LLC, the port operator that runs the Long Beach terminal. Mediterranean Shipping already owns the other 46%.
In court papers, Hanjin said it had little time to complete the sale of the 385-acre facility, which handles millions of containers each year. Without the sale, Hanjin lawyers said the company and its creditors “will potentially suffer significant, if not irreparable, harm.”
The sale has already been approved by the Seoul Central District Court, which is the primary authority overseeing Hanjin’s bankruptcy, on the condition that it also is endorsed by the U.S. bankruptcy court and the U.S. port authority. A hearing on the sale is slated for Thursday in Newark.
Companies owed money from leasing tens of thousands of containers to Hanjin before it filed for bankruptcy said there are “many questions unanswered with respect to the sales process” and that it is unclear whether the proceeds will be used to repay them for “massive financial losses.” Lawyers for the container lessors said the shipper is continuing to use those containers but has “failed and refused to pay rent or any other charges.”
In court papers, other creditors cited “significant deficiencies” in Hanjin’s argument that the proposed $78 million deal is the best offer available, and they have asked Judge Sherwood to order Hanjin to hold any proceeds from the sale in escrow in the U.S. and to use the money to repay U.S. creditors.
Lawyers for the creditors are also seeking to compel Hanjin to reveal more information about how the sale process was conducted.
A lawyer for Hanjin declined to comment Monday.
Last month, Judge Sherwood ordered the company to disclose a wealth of new information about its U.S. assets, including their estimated value and location. The judge also called for a separate report on all funds recently transferred from the U.S. to South Korea.
In court papers filed Friday, Hanjin estimated the value of its U.S. assets, including the Long Beach terminal operator and property it owns in New Jersey and Georgia, at about $130 million. The report also disclosed that about $82 million in accounts receivable has been transferred out of the U.S. since the company sought bankruptcy protection.
Hanjin filed for the equivalent of chapter 11 bankruptcy in South Korea in August and sought recognition of its bankruptcy in the U.S. days later by filing for chapter 15 protection, the section of the U.S. bankruptcy code that deals with insolvencies overseas.
Hanjin seems likely to be liquidated or reduced to a small regional operator after selling most of its assets, a process that is well under way. A Seoul court handling Hanjin’s bankruptcy proceedings is expected to make a final decision on its fate in February.
Source: Bloomberg
