- STX Offshore, South Korea's 4th-largest shipbuilder, filed for Chapter 15 bankruptcy protection in a Texas bankruptcy court on Wednesday, according to a Wall Street Journal report.
- The shipbuilder had filed for receivership in May and is currently in the process of selling its Korean shipyard and still-profitable French cruise offshoot. However, U.S. clients had attempted to seize STX's assets in exchange for unfulfilled orders.
- The company's struggles were caused by STX's acquisition of a Chinese shipyard just as the industry began to face large losses due to heavy declines in orders, the Journal reports.
STX Offshore's bankruptcy announcement is not to the scale of Hanjin's receivership, but it highlights the struggles faced by the shipbuilding industry and just how long it can take for a company to get back on its feet following a major crisis.
As regards the first point, shipbuilders can be seen as representative of the industry's growth. As shippers demand more cargo capacity, shipping lines demand more ships; but as cargo needs decline and carrier revenues fall with them, shipbuilders suffer.
Second, it had been five months between STX's filing for receivership and the time former clients were threatening to seize assets. Perhaps it took the clients five months to realize the company would take far longer to regain solvency and repay obligations, or they attempted to reclaim payment via the Korean system and were slow-rolled.
Regardless, as Hanjin faces similar claims from Ashley Furniture in a New Jersey court, the two examples highlight the damages that can result from bankruptcies down the supply chain.