Hanjin's creditors may receive less than two cents on the dollar
- Hanjin assets, which have been for sale from the debtor's estate in order to raise funds to pay back creditors, have reached only $220 million, while outstanding debt to creditors is over $10 billion, the Loadstar reported.
- The result is that many creditors will likely receive less than two cents on the dollar against what's owed them. In its court statement, DR & AJU International Law Group admitted it did not know when initial distributions will begin.
- When the line filed for receivership last August 31, it did so with roughly 500,000 TEU of cargo worth nearly $12 billion dollars stranded in various vessels within the fleet around the globe. Industry experts say Hanjin's failure surpassed even the United States Lines crash in 1986 and is the worst in the 60 years since container shipping began.
In the standoff between Hanjin's secured and unsecured creditors, neither is likely to emerge from remaining proceedings with satisfaction. Seeing as how the now-bankrupt line is $9.78 million short in repayment funds, it's unclear how much debt was secured, meaning that those unsecured creditors may leave the ordeal empty-handed.
While Hanjin was an unusual case due not only to its size but to its Chapter 15 status, most businesses present easy to read signals of insolvency. Delays in payment or merchandise, poor cash flow, credit line constraints, or capital shortages are all signs of trouble that should be heeded before continuing to do business with a problematic partner.
Sometimes losses make a partner desperate. In the case of Payless ShoeSource, a group of suppliers banded together to publicly shame the company for its poor payment record. In the case of Hanjin, Ashley Furniture attempted to gain access to Hanjin assets despite the fact that the case was ultimately to be adjudicated in Korea, Hanjin's home country. When it was discovered that Ashley itself had yet to pay Hanjin, its case was significantly weakened.
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