Hanjin Shipping will be declared bankrupt today, after suffering from snowballing debt amid a slowdown in the global shipping market.

Seoul Central District Court is expected to declare bankruptcy of the shipper, following a two-week period for appeals. Following the declaration, a bankruptcy trustee will be appointed to lead the sale of Hanjin Shipping’s remaining assets to pay off debts to creditors.

The declaration would be the end of the 40-year history of the world’s former No. 7 shipper, which once boasted more than 1,300 employees and a massive fleet of 97 container ships and 44 bulk carriers.

As of Thursday, Hanjin Shipping pulled down all pages on its website, including investor relations and company overview, leaving only a bulletin board for creditors. The company had left the website fully open even after the court decided to end the company’s receivership process on Feb. 2, in a belief that it may avoid liquidation.

Back then, the court said “the firm’s liquidation value would be worth more than its value as a going concern.” According to Samil PricewaterhouseCoopers, which did the calculations on behalf of the court, the firm’s liquidation is expected to fetch 1.79 trillion won ($1.57 billion), while it is unable to calculate the company’s going concern value because of uncertainties.

The closure of the website is interpreted as the company’s recognition that it cannot salvage itself. Though there are several cases in which endangered companies have annulled bankruptcy declarations through appeals, observers say that will not be the case for Hanjin, because almost every function of the company has stopped.

The question is whether the company has assets left for sale. It previously sold its Asia-North America shipping route to Samra Midas Group and its 20 percent stake in International LLC, a U.S. port terminal operator, to domestic rival Hyundai Merchant Marine (HMM). Its only remaining assets are terminal managing company Hanjin Pacific Corp. and some overseas offices.

Though the Hanjin debacle will be wrapped up with the declaration, its fallout still threatens Korea’s shipping industry, which had been driven by the country’s two shipping giants of Hanjin and HMM.

One of the threats is a large-scale reshuffle of global shipping alliances. In April, the members of four major alliances — 2M, Ocean Three, G6 and CKYHE Alliance — will realign themselves into three alliances of 2M, Ocean and THE.

Currently, HMM is a strategic partner of 2M, though it is not a member of the alliance. Should HMM fail to cope with the massive changes in the industry, it may incur the same fate as Hanjin Shipping, observers say.

Also, the continuing increase in tonnage provided by shippers is still causing an oversupply, weighing on the global shipping industry. IBK Research Center expects the sluggishness in the industry will likely continue until 2018.

Observers say those factors may be mixed up and deal a serious blow to Korea’s shipping industry in June.

The government on Wednesday said it will pour 750 billion won into HMM to help it normalize its business. HMM also underwent massive restructuring last year and survived.

Source: The Korea Times