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Hanjin creditors seek to keep ships anchored in US waters

By Tom Corrigan

Creditors of Hanjin Shipping Co., fearful of having their collateral disappear over the horizon, have asked a US bankruptcy judge to reconsider a ruling preventing them from seizing several of the South Korean carrier’s ships.

A group of creditors who have gone unpaid for services such as towing and fueling say that the judge’s order shouldn’t apply to vessels chartered by Hanjin because they aren’t legally its property. The creditors have liens against Hanjin ships that would ordinarily allow them to foreclose on the vessels.

Unless the US judge intervenes, ships that have unloaded their cargo in the US are free to set sail for foreign ports that may not recognize the creditors’ rights.

A Hanjin Shipping Co shipREUTERS/Lucy Nicholson (2016.mb.com.ph)

A Hanjin Shipping Co ship REUTERS/Lucy Nicholson (2016.mb.com.ph)

At least seven Hanjin vessels have been “arrested” at ports in China, Singapore, India, and elsewhere, according to a carrier’s vessel status report.

Dan Harris, a lawyer at the boutique Seattle law firm of Harris Moure, often works with businesses with operations in China. He said shipowners and other Hanjin creditors will be looking to arrest vessels in places that won’t enforce a US court order.

“China does not enforce US judgments,” Mr. Harris said. “They’re not required to under any international law and they don’t.”

Hanjin filed for the equivalent of chapter 11 bankruptcy in South Korea last month and sought recognition of its bankruptcy in the US days later by filing for chapter 15 protection, the section of the US bankruptcy code that deals with insolvencies overseas.

The immediate aftermath of Hanjin’s bankruptcy left the company fearful that its ships would be arrested by creditors as soon as they pulled into port. And it was unclear whether terminals, tugboats crews, crane operators and the army of other workers needed to unload ships would be paid for docking the ship and unloading its cargo.

Hanjin’s many customers, meanwhile, have some $14 billion worth of goods on board Hanjin’s ships and are anxious to have the vessels unload at ports as soon as possible. It is unclear, however, what would happen to shipments if the ships carrying containers are seized. Many cargo terminals around the world have refused to allow Hanjin ships to reach docks, and cargo workers have refused to handle the carriers containers without up-front payments.