<<NEWARK, New Jersey — The sale of Hanjin Shipping’s majority ownership of a company that operates two marine terminals — in Seattle and Long Beach — for $78 million can go ahead, a federal bankruptcy judge ruled Wednesday.
Judge John K. Sherwood, sitting in U.S. Bankruptcy Court in Newark, backed the arguments of attorneys for the carrier who portrayed the sale of Total Terminals International, which operates the terminals, as the best deal possible under the circumstances, and one that wouldn’t hurt US creditors.
Hanjin Shipping owns 54 percent of TTI and the remaining share of the company is owned by Terminal Investment Ltd., which is Mediterranean Shipping Co.'s terminal operating subsidiary and is the buyer under the deal approved by Sherwood
Witnesses testified in two hearings last week that TTI was awash in losses since Hanjin Shipping, its largest customer, filed for bankruptcy in a South Korean Court on Aug. 31, and the terminal operator may also have to file for bankruptcy if the sale did not go ahead.
“It seems like getting $78 million under these circumstances is a pretty good deal,” Sherwood said.
After Hanjin filed for bankruptcy, Sherwood approved the company's request for Chapter 15 status.
That meant the South Korean case would be recognized by US courts, and any sales of Hanjin assets in the United States would have to be approved by a US court.
The judge backed the sale over heated opposition from creditors, who say they are collectively owed tens of millions of dollars and sought to paint the sale process as insufficiently thorough and executed too quickly.Sherwood said the creditors sought to paint the deal as a “sale to (an) insider.”
The creditors, mostly container or chassis lessors whose claims stem from services allegedly provided to Hanjin Shipping after it filed for bankruptcy in South Korea, also sought to persuade Sherwood to rule that the proceeds of the sale should remain in the United States for distribution to US creditors, suggesting that their rights may not be protected in South Korea.
Hanjin, however, said that the South Korean bankruptcy court had required as part of the sale that the funds be transferred to South Korea for distribution. And Sherwood said he had confirmed with a judge in the South Korean bankruptcy case that the transfer was required by that court.
Witnesses that testified in court, mostly about the Long Beach terminal, said that because Hanjin provided about half the containers normally handled each year by the terminal, its volume dropped from about 1.3 million containers a year to 650,000 when the company filed for bankruptcy. As a result, the terminal operated at a loss at the end of 2016, with a full-year loss of $37 million in earnings before interest, tax, depreciation, and amortization, witnesses said.
TIL initially offered $25 million and then $50 million for the company, but the bid was not accepted, and Hanjin created a bid process. That drew interest from investment company Hahn & Co., which eventually withdrew without making a bid, and prompted TIL to increase its offer to $78 million.
Sherwood said that having seen South Korean court documents, and having spoken to the South Korean judge, that creditors would be treated fairly in that court.
“I think they are protected and I think allowing their claims to be administered here in the US, and keeping the money here in the US, would amount more to favoritism than protectionism,” the judge said, adding that that is not what the law is designed for.
He said that while a better offer may have surfaced with a longer bid process, the carrier and its financial advisers clearly “decided to take the bird on the hand, which is $78 million of real money,” in a “reasonable exercise of business judgement.”
“Nobody knows what will happen. Maybe TTI will end up in bankruptcy and maybe these interests that are being sold today will not bring any value to Hanjin's estate,” he said. “I would rather have $78 million in Korea than zero in the United States.”>>
Fuente: JOC.com, Hug R. Morley, http://www.joc.com/maritime-news/container-lines/hanjin-shipping/sale-hanjin-controlled-us-terminals-approved_20170118.html