Hanjin Shipping officially declared bankruptcy….
folding under the weight of billions of dollars of debt despite government support. According to our Kim Min-ji, the downfall
of the company that was the biggest name in nation’s shipping sector,… expected to deal
a damaging blow not just to the local industry, but the economy as a whole. A 40-year history… ended. The Seoul Central District Court on Friday
cut off the lifeline of Hanjin Shipping — once Korea’s largest shipping company… and the
world’s seventh largest — following a two-week appeals period. A bankruptcy trustee will now be appointed
to sell off Hanjin’s remaining assets. Earlier this month, the court decided to end
the rehabilitation scheme,… saying the firm’s liquidation value would be worth more than
its value as a going concern. Hanjin had been under court receivership since
last September, after creditors decided not to extend further financial support. At the time, the company’s debt stood at over
5 billion U.S. dollars. Hanjin’s collapse was preceded by tough industry
conditions,… including low freight rates due to overcapacity, and a decline in shipments
from slumping global demand. Some of Hanjin’s routes will now be covered
by foreign shippers,… and Korean exporters may have to shoulder the cost of redirecting
the shipments or finding new shippers. Layoffs are another concern — while the government
says 2-thousand workers will lose their jobs,… experts expect about 25-thousand job losses
from related companies as well. “I feel as though the government failed to
recognize the importance of the shipping industry as a national industry. Rather than help it stand up again,… Hanjin
was forced to sell its major assets — in essence, leaving it with no options to create
profit. The collapse is expected to result in a plunge
in Korea’s credibility as a shipping nation.” Hyundai Merchant Marine now becomes the dominant
player in the local shipping industry. It will take on about 200 Hanjin employees
and stakes in Hanjin’s overseas terminals… and it’s aiming to grab 5 percent of the global
market share by 2021. It currently holds about 2-point-2 percent
of all shipping routes — falling short of Hanjin’s share of about seven percent in cargo
from Asia to North America. With more industries set to go through debt
workout schemes, experts say the government needs to do more in the initial stages. “We cannot look at different sectors as one. It should depend on the industry outlook and
economic principles. We have to consider both the company’s financial
status and industry factors — and then decide what’s needed.” Experts add that as timing is key in corporate
restructuring, they say it’s important that the next administration sees it as a priority. Kim Min-ji, Arirang News.