The once great shipping giant, Hanjin Shipping Co., Ltd. is now facing liquidation. The appraised liquidation value is 19 trillion won.

On September 12, 2016, the Bankruptcy Division of the Seoul Central District Court in charge of the rehabilitation proceedings of Hanjin Shipping Co., Ltd. amended the initial schedule of the rehabilitation proceedings as follows: 

Submission of List of Creditors (by receiver): On or before October 10, 2016

Submission of Secured and/or 

Unsecured Rehabilitation Claims (by creditors): October 11 – October 25, 2016

Investigation of the Reported Rehabilitation Claims: October 26 – November 15, 2016

The three once-major Korean shipping and shipbuilding companies - Hanjin Shipping Co., Ltd. (Hanjin Shipping), STX Offshore & Shipbuilding Co., Ltd. (STX O&S), and Daewoo Shipbuilding & Marine Engineering Co., Ltd. (DSME) - today stand at crossroads of destiny between rehabilitation and bankruptcy. Given the global nature of the operations by the companies, their fate will have a substantial impact on the economy globally.

“Workout” in Korea is generally accepted as an out-of-court corporate restructuring process aimed at speedy business normalization of financially distressed companies by cooperation  between  the  debtor  company  and  its  creditors.

On 19 May 2016, the National Assembly passed the bill to amend the Debtor Rehabilitation and Bankruptcy Act (“DRBA”).  Key amendments include (1) improvements to the early proposed rehabilitation plan submission policy; (2) broadened scope of creditor participation in the proceedings; and (3) stronger protection of creditors with commercial claims.  The revised DRBA is expected to enter into force 3 months after promulgation. 

I. Improvements to the early rehabilitation plan proposal submission policy

I. Hanjin Shipping applies for rehabilitation proceedings

I.      The Bankruptcy Court’s commencement of rehabilitation proceedings and announcement of timetable