September 9, 2016

Current Status of Hanjin's Bankruptcy and Complications


In an effort to keep our clients up to date on relevant industry news, we have compiled a timeline of the events of Hanjin Shipping's collapse and how it has and will continue to cause disruption. Hanjin's 2.9% market share of total container capacity in the world is beginning to have major impacts. Considering the scope and complexity of this issue, we anticipate change and development over time, and Avalon will continue to provide appropriate guidance.

August 31, 2016 - Hanjin filed for receivership, or bankruptcy, in Seoul Central District, South Korea.

  • Hanjin distributed a notice to customers. This notice can be read here.
  • Complaints were filed worldwide by such parties as fuel suppliers and vendors in order to arrest the company's vessels.
  • OTIs and other providers are being named as garnishees in actions against Hanjin.
  • MTOs are refusing to deliver Hanjin containers.
  • Hanjin's terms as per their bill of lading and waybill use such language as in the "Liberties" clause that permits unilateral termination of the carriage. As such, "Merchants" may have liability for the on-carriage and delivery of their cargo. In some cases, the "Merchant" may be the beneficial cargo owner or an NVOCC listed as a shipper on the bill of lading.
  • If entry of cargo is not completed within 15 days of importation, Customs Border Protection (CBP) may proceed with a General Order (abandonment).
  • Avalon suggests that merchants review their service contracts for dead freight commitments, etc.

  • September 1, 2016 - The Federal Maritime Commission (FMC), offered guidance on the issue due to multiple informal complaints. Please read their statement here.

    September 2, 2016 - Hanjin filed for Chapter 15 bankruptcy with the U.S. Bankruptcy Court of New Jersey (case number 16-27041-JKS).

  • Hanjin's service partners move to suspend or dissolve joint services.
  • The shipping company's creditors may be subject to actions arising under foreign law.
  • U.S. Customs and Border Protection (CBP) issues guidance on how to handle vessel diversions and example scenarios. Read CBP's message.

  • September 6, 2016 - It was announced that Hanjin secured $90m in emergency funding from its parent group to bring ashore some stranded vessels (amounting to as much as $14 billion worth of cargo) at sea or seized by creditors.

  • The Korean government has designated only three "base" ports: Los Angeles, Singapore and Hamburg where Hanjin vessels can safely unload ships without the risk of seizure.
  • Containers of unknown ownership can be verified at the Bureau International des Containers et du Transport Intermodal (BIC) website using the container prefixes.
  • The Los Angeles Customs Brokers & Freight Forwarders Association (LACBFFA) has provided guidance from CBP regarding procedures for Hanjin containers within the LA/LB port complex. Read their statement.

  • September 7, 2016 - Hanjin was granted interim bankruptcy protection in the U.S. They will return to court today, Friday, September 9th. Read more.

    Please read Avalon's initial statement and guidance regarding the insolvency of Hanjin if you have not done so already.

    If your company has been affected in this event, please submit any claims against you or those arising from the situation to our Transportation Claims Department at claims@avalonrisk.com.

    Printable version Back to Quest News™