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Hanjin terminal sale faces obstacles from creditors

HANJIN Shipping Co.'s US creditors have filed court papers with the US Bankruptcy Court in Newark urging the judge hearing the case to throw out, delay or modify the proposed sale of the South Korean carrier's key remaining assets: the port operator that runs the biggest container terminal in Long Beach, California.

The creditors, including container lessors, insurance providers and the Port of Seattle, say their rights are being affected by the sale, The Wall Street Journal reported.

Geneva-based Mediterranean Shipping Co.(MSC), the world's second largest container operator by capacity, has offered US$78 million for the terminal. Hanjin has asked Judge John Sherwood to approve the bid, which it said was the highest and best offer following a competitive bidding process.

Hanjin owns a 54 per cent stake in Total Terminals International LLC (TTI), the port operator that runs the Long Beach terminal. MSC already owns the other 46 per cent.

In court papers, Hanjin said it had little time to complete the sale of the 385-acre facility, which handles millions of containers each year. Without the sale, Hanjin lawyers said the company and its creditors "will potentially suffer significant, if not irreparable, harm."

The sale of TTI has already been approved by the Seoul Central District Court, which is the primary authority overseeing Hanjin's bankruptcy, on the condition that it also is endorsed by the US bankruptcy court and the US port authority.

Companies owed money from leasing tens of thousands of containers to Hanjin before it filed for bankruptcy said there are "many questions unanswered with respect to the sales process" and that it is unclear whether the proceeds will be used to repay them for "massive financial losses." Lawyers for the container lessors said the shipper is continuing to use those containers but has "failed and refused to pay rent or any other charges.

In court papers, other creditors cited "significant deficiencies" in Hanjin's argument that the proposed $78 million deal is the best offer available, and they have asked Judge Sherwood to order Hanjin to hold any proceeds from the sale in escrow in the US and to use the money to repay US creditors.

Lawyers for the creditors are also seeking to compel Hanjin to reveal more information about how the sale process was conducted.

A lawyer for Hanjin declined to comment early in the week.