SEOUL - The South Korean court handling Hanjin Shipping's receivership cast doubt on the container carrier's ability to survive a restructuring, news reports said, as 13 Hanjin ships crowded waters outside the country's biggest port.
A rehabilitation plan for the world's seventh-largest container carrier is "realistically impossible" if top priority debt such as backlogged charter fees exceed 1 trillion won ($896 million), the Seoul Central District Court said, South Korea's Yonhap newswire reported on Wednesday.
Hanjin, which filed for court receivership late last month, must submit a rehabilitation plan in December that creditors owed billions of dollars will be called to agree to.
Hanjin has begun returning chartered vessels to their owners and is trying to secure funds to help unload ships. An estimated $14 billion in cargo was initially trapped on its ships around the world, creating havoc ahead of the crucial holiday shopping season.
Some 13 Hanjin container ships were waiting in international waters outside Busan port, according to latest Hanjin data on Wednesday, as South Korea's largest port struggled to accommodate vessels denied entry elsewhere and forced to sail home to South Korea.
"It's a highly abnormal situation. Time is money for a shipper, so the more ships wait, the more losses," a Busan Port Authority spokeswoman said.
"Some ships are waiting because they cannot leave for their destination," she said.
At the Hanjin Newport section of Busan port, 78.6 percent of container capacity was filled as of Wednesday morning, higher than the 60 percent preferred for efficient operation, the port spokeswoman said. Of about 33,000 containers at Hanjin Newport, about 40 percent held cargo.
Busan is one of a handful of major global ports where Hanjin ships can freely unload cargo without threat from creditors. South Korea's maritime ministry said earlier this month Busan and Incheon port authorities will guarantee payments for most services offered to Hanjin Shipping vessels.
Hanjin was granted stay orders to protect its ships from seizure in South Korea, the United States, Japan, Britain and provisionally Singapore earlier this month and is applying for stay orders elsewhere. However, dozens of ships remained anchored off ports while Hanjin tries to secure funds to unload cargo.
With debt of about 6 trillion won ($5.4 billion) at the end of June and the South Korean government's unwillingness to mount a rescue, expectations are low that Hanjin Shipping will survive.
Top priority debt means claims for public interests, which are paid first to creditors and include cargo owners' damages and unpaid charter fees, Yonhap reported citing the Seoul Central District Court.
Backlogged charter fees that occurred after Hanjin Shipping's court receivership have topped 40 billion won, while cargo owners' claims for damages are expected to begin in earnest after 3-4 weeks have passed from original delivery schedules, the report said.
Court officials were not immediately available for comment.
Shares in Hanjin plunged more than 20 percent to a record low after the court comments were reported, which lent support to the view the company will slide into liquidation.
Rival Korean shipping company Hyundai Merchant Marine Co Ltd (HMM) surged 16 percent to a near two-week high.
On Wednesday, HMM said it would add a vessel on the Busan to Europe route starting Sept. 29 to ease the capacity squeeze caused by Hanjin's collapse.
"HMM is the only national shipping company that is left to take care of what Hanjin Shipping was in charge of for now," said Cho Byung-hyun, an analyst at Yuanta Securities Korea.
"The market is expecting HMM to take back Hanjin's pie from the industry though there is still some possibility that shipping companies from China, Taiwan, or Hong Kong would come in.