On August 31, 2016, Hanjin Shipping Co. filed for bankruptcy protection in South Korea. Two days later, Hanjin filed in U.S. Bankruptcy Court for the District of New Jersey for Chapter 15, which provides a mechanism in the U.S. for resolving problems that arise in cross-border bankruptcies. Three out of four U.S. shippers reportedly have cargo on Hanjin vessels, so the repercussions of the bankruptcy filings are widespread.
Supply chain issues regarding release of cargo and equipment issues (demurrage, detention) may require commercial/legal resolutions with third parties and, when necessary, resolutions in the U.S. and South Korean bankruptcy courts. The following junctures in the supply chain may be problematic:
- Cargo on Hanjin Vessels Arriving in the U.S.
- Hanjin Cargo on Hanjin Partners’ Vessels Discharged in U.S.
- Hanjin Vessels Overseas
- Hanjin Cargo at U.S. Railyards
- Hanjin Equipment Issues in the U.S., Demurrage and Detention
- Hanjin Reneging on Credit Terms
More specific information about how this may affect businesses can be found in this legal alert. For more information on how the Hanjin bankruptcy may affect your business, contact Carlos Rodriguez or Benjamin Mann.