Source: Hugh R. Morley, Senior Editor | Sep 06, 2016 10:07PM EDT | JOC
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 return of those goods stands to cost shippers as transportation providers, from marine terminals to drayage
drivers, are charging for the release of Hanjin containers. The stranded ships — four of which are on the west
coast of North America — could also carry containers belonging to Hanjin’s fellow CKYHE Alliance members
and other carriers it has slot¬-sharing agreements with. The Hanjin Group plans to pay $90.7 million to rescue these
containers — some 530,000 globally.
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
— argued 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 ruling temporarily prevents vendors from taking legal action against Hanjin to arrest ships for unpaid bills
and exercising their rights to a lien, attorneys at the hearing said. It also prevents them from breaking contracts
on the basis that Hanjin’s financial situation means they may not get paid, attorneys said.
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.
The Hanjin Miami was on Monday anchored about 12 miles out of the Port of New York and New Jersey,
rather than enter the port because it feared seizure, an industry executive said.
J. Stephen Simms, an attorney for the two fuel companies, Ocean Connect Marine and World Fuel Services,
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,” Sherwood said in response to one attorney’s presentation.
Ilana Volkov, a Hackensack, New Jersey attorney representing Hanjin, urged the judge to approve a waiver, so
that the company could focus on operating its business, rather than worry about seizures.
“We need a provision of relief so that the operation in the US can continue, free of concerns that ships are going
to get arrested,” Volkov said. Asked by the judge whether Hanjin had the money to stabilize so that there was a
likelihood that creditors could get paid, Volkov said: “All we can assure people is that the company is working
around the clock to raise the necessary financing so that we can start paying people.”
Volkov said, however, that Korean Airlines, the parent of Hanjin Shipping, had agreed to put $100 million into the
company to help it through bankruptcy.