South Korea’s biggest container shipping line Hanjin Shipping Co has decided to apply for court receivership after lenders halted all support, says a report in Bloomberg.
A Reuters report also says that it would file for court receivership after losing the support of its banks, and the country's financial regulator said a rival operator will look to buy Hanjin's "good" assets.
Banks withdrew support for the world's seventh-largest container carrier on Tuesday, saying a funding plan by its parent group was inadequate to tackle the firm's 5.6 trillion won ($5 billion) in debt.
South Korea’s Financial Supervisory Service said in a statement Wednesday that Hyundai Merchant may consider taking over some of Hanjin Shipping’s assets, including vessels, network and staff.
Hyundai Merchant Marine Co said it will work with authorities to come up with measures without elaborating.
Hanjin and its domestic rival, Hyundai Merchant Marine, handle the bulk of South Korea’s exports and have been unprofitable for several years, amassing debt as global shippers grapple with excess capacity and falling prices.
Hanjin is not the only victim of the slump in the global container shipping industry, says FT.
Competitors including cross-town rival Hyundai Merchant Marine are also facing mounting losses and precarious financial conditions as sluggish global trade growth since the 2008/9 financial crisis has resulted in a glut of industry capacity.
Hanjin is among shipping lines grappling with a slump in global trade since the 2008 financial crisis and the slowest pace of economic growth in China in a quarter century.