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Monday, September 05, 2016
To: Hanjin Customers

Dear Valued Hanjin Customer,

First, please accept our apologies for the inconvenience caused to you by Hanjin Shipping’s application for corporate rehabilitation proceedings.
Hanjin Shipping filed its application for corporate rehabilitation proceedings to the Seoul Central District Court on the afternoon of the 31st, and the same day the court issued a preservation order and a comprehensive ban on the compulsory execution of property.
The justice department will have 1-2 months to deliberate on the justice of Hanjin’s filing of rehabilitation, and determine whether Hanjin survives or be liquidated. If the court decides that Hanjin is to be survived, the legal management will begin, and the actual restructuring procedure will start through adjustment of debt.
For the further detail on company rehabilitation proceedings, please see the attached. Thank you.

September 1st, 2016
Woo Jeong Yang
Managing Director
Southeast & West Asia Regional Headquarters,
Hanjin Shipping (S) Pte Ltd

Sincerely Yours,

Hanjin Shipping Co., Ltd

 

REHABILITATION PROCEEDING

 

Filing of Petition for Rehabilitation Proceeding  

 

 –  The debtor company, creditors (holding claims of 1/10 or more of the company’s paid-in capital amount), or shareholders (holding 1/10 or more of the company’s issued and outstanding shares) may file the petition.
     
       
Preservation Order   –  The court must decide whether it will issue a preservation order within 7 days after the filing.

–  This prohibits the debtor company from disposing of its assets, making payments for existing debt or borrowing money without court approval.

–  The court may issue a comprehensive or specific stay order, prohibiting all or specific creditors from taking actions to enforce their claims or foreclosing their security interests.
     
       
Determination on the Commencement of Rehabilitation Proceeding   –  The court must decide whether it will commence the rehabilitation proceedings within 1 month after the filing.

–  In principle, a receiver is appointed.  In principle, the court should appoint the representative director (i.e., the existing management) of the debtor company as the receiver.
     
       
Valuation   –  The court appoints an examiner to evaluate the assets and liabilities, the debtor company’s liquidation value and going concern value, debtor company ‘s rehabilitation potential, possibility of making payment for debts, etc.
     
       
Report/Filing of Rehabilitation Claims   –  The receiver should submit a list of the unsecured rehabilitation claims, the secured rehabilitation claims and the shareholdings within the period decided by the court (between two weeks and two months from the commencement)

–  Creditors not included on the list prepared by the receiver or creditors who dispute the claim amount stated in such list should file claims with the court during the claim filing period decided by the court (between one week and one month from the last date of the receiver’s report period)

–  Claims which are not included in the receiver’s report nor filed with the court during the claim filing period shall be extinguished when the rehabilitation plan becomes effective.

–  If the Receiver denies the claims, then in order to pursue the claims, the Creditors should file a Confirmatory Action to the Bankruptcy Court within 1 month of the date of the Receiver’s denial of the claims.  The decision on the Confirmatory Action may be appealed as an Objection

 

Report/Filing of Rehabilitation Claims   –  The receiver should submit a list of the unsecured rehabilitation claims, the secured rehabilitation claims and the shareholdings within the period decided by the court (between two weeks and two months from the commencement)

–  Creditors not included on the list prepared by the receiver or creditors who dispute the claim amount stated in such list should file claims with the court during the claim filing period decided by the court (between one week and one month from the last date of the receiver’s report period)

–  Claims which are not included in the receiver’s report nor filed with the court during the claim filing period shall be extinguished when the rehabilitation plan becomes effective.

–  If the Receiver denies the claims, then in order to pursue the claims, the Creditors should file a Confirmatory Action to the Bankruptcy Court within 1 month of the date of the Receiver’s denial of the claims.  The decision on the Confirmatory Action may be appealed as an Objection Lawsuit to the Civil Division of the Civil Courts.
     
       
Creditors’ Meeting   –  Interested parties’ meeting may be held within three months from the commencement of the rehabilitation proceeding.
     
   

 

 

    
Decision on Whether or Not to Continue the Proceeding   –  The court may terminate the rehabilitation proceeding before the approval of the rehabilitation plan if the liquidation value of the subject company clearly exceeds the going concern value thereof.
     
       
Preparation and Submission of Rehabilitation Plan  

 

 –  The court orders the receiver to prepare and submit the rehabilitation plan within the period decided by the court. The period may not exceed four months (for large companies) or two months (for small & medium size companies or non-corporations) from the commencement. –  Creditors holding 50% or more of the rehabilitation claims may submit a plan within the period decided by the court. If such plan is submitted, the receiver may omit or withdraw submission of the plan.

–  Mandatory items to be included in the Plan: any modifications of the rights of secured creditors, unsecured creditors and shareholders; payment of administrative expenses; manner of securing fund for payment of debt; usage of extraordinary profits, etc.

–  Optional items to be included in the Plan: transfer of business and assets; modification of the Articles of Incorporation; reduction of capital; issuance of new shares and bonds; merger; establishment of a new company.

–  Administrative expenses include claims for the value of goods received by the debtor in the ordinary course of the debtor’s business within 20 days of the filing.

 
     
     
       
Interested Parties’ Meeting for Review of the Rehabilitation  Plan   –  To review the rehabilitation plan.

–  To have a hearing on the views of the receiver, the management, unsecured/secured creditors, shareholders, the regulatory authorities, and labor union.

–  The court may order modification of rehabilitation plan.
     
       
Interested Parties’ Meeting for Voting on the Rehabilitation Plan   –  To vote on the plan.

–  Instead of holding a meeting, the court may refer the plan to a written resolution.

–  Consents from not less than 2/3 of unsecured creditors, not less than 3/4 of secured creditors, and (only if the total assets of the company exceed its total liabilities) not less than 1/2 of shareholders are required.

–  A rehabilitation plan must, in principle, be approved within one year from commencement of the rehabilitation proceedings.

–  After the court issues the decision to hold the interested parties’ meeting for resolution on the plan or to refer the plan to written resolution, no claim may be filed.
     
       
Court Approval of the Rehabilitation Plan   –  Even if the plan does not receive consent from all classes of creditors, the court may approve the plan after providing “adequate protection” for the dissenting creditors if consent from at least one class of creditors has been obtained.
     
       
Implementation of the Rehabilitation Plan   –  If payment under the court-approved rehabilitation plan has commenced, the court shall, upon petition by an interested party or at its discretion, terminate the rehabilitation proceeding early, unless there is an impediment to the implementation of the rehabilitation plan.
     

 

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