Hanjin’s Lack of Bankruptcy Strategy Causes Chaos to its Operations

by San Antonio Attorney

Hanjin Shipping Company declared bankruptcy in South Korea in August, and asked that the bankruptcy be recognized by the United States.

While Hanjin is sorting out its bankruptcy, there has been obvious disorder as vessels have been stranded off shore, along with crews and cargo.

Hanjin’s bankruptcy case appeared to be unplanned.  Usually, bankruptcy professionals are hired in the preparation of the bankruptcy filing.   Part of their responsibilities would be to take into consideration all the assets around the world.

According to analysts, the noticeable lack of bankruptcy planning resembles the case of Lehman Brothers and its slapdash disintegration into bankruptcy.

For instance, every time an airline declares bankruptcy, which has occurred with remarkable frequency, the operators ensure that during the filing the aircrafts are not in jurisdictions where the situation is unfavorable for the airplanes and its passengers.

Similarly, it is important to be prepared with cash where it will be necessary in the first days of the bankruptcy, when the move is most likely to cause a major interruption to the business operations.  Such funding only now appears to be approaching in Hanjin.  However, it already suffered damages.

Experts compared Hanjin to American Airlines when it filed for bankruptcy a few years ago with negligible impact on its business operations.  They also foresee an increase in the trend for international cases of insolvency to gather in London, New York, and other financial centers, which would raise significant indications that international insolvency is indeed lawful.

Hanjin is reportedly looking for buyers to almost all of its current fleet and pass on 61 vessels that it chartered as part of its bankruptcy plan in South Korea.

The Korean shipping line has filed for Chapter 15 bankruptcy in the United States, to try to prevent the company’s creditors from taking its fleet of ships.

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