An update from Kathie Cravens, our International Trade Specialist:
Stranded Hanjin Ships Get Temporary US Bankruptcy Protection from Arrest
NEWARK – A Federal judge Tuesday granted Hanjin Shipping temporary protection to prevent its ships from arrest and from vendors breaking their contracts, giving US importers awaiting cargo on those ships hope they will get their goods soon.
The ruling by Judge Kevin Sherwood, sitting in US District Bankruptcy Court in Newark, gives the troubled South Korean shipping company space to try to restructure its business and emerge from bankruptcy. The ruling came after attorneys for companies – including cargo owners, chassis companies, port terminal and fuel companies – argue against the protection, known as a waiver. They said the protection might impede their efforts to liberate cargo moved by Hanjin or to get paid for services provided to the carrier.
The hearing came as Hanjin ships in Australia, Singapore and China were under arrest after companies owed money requested authorities seize the vessels. An attorney for two fuel companies said Hanjin owed about $260,000 in unpaid bills and that they had prompted federal authorities to seize the Hanjin Montevideo in Long Beach in recent days. Four Hanjin ships are stranded off the west coast of the United States and Canada.
Stephens Simms, an attorney for the two fuel companies said there are 15 to 20 ships waiting in US waters to see how the court rules, and whether they can enter a US port without risking seizure.
Sherwood granted the temporary protection until Friday, when the court will reconvene and seek to structure a permanent ruling that will balance the needs of Hanjin with those of its creditors. Dozens of attorneys attended the five-hour hearing. Their competing interests prevented the attorneys, and one for Hanjin Shipping, from reaching an agreement on the terms for a permanent protection order.
“This is, as you said, a logistical mess,” [Judge] Sherwood said in response to one attorney’s presentation.
What does this mean for exporters?
If you have cargo on any of the Hanjin vessels that might be risking seizure, be sure to keep in close contact with your freight forwarder and/or import brokers for the latest breaking news on this situation. We will keep you updated as more developments unfold.