Bankruptcy Sale of Hanjin’s US Ports Business
A&O wins US court approval for sale of majority interest in US shipping terminals in largest ever container shipping bankruptcy
Hanjin Shipping Co. (2017)
A&O advised Hanjin on the sale of its majority interest in Total Terminals International, which operates container shipping terminals in Long Beach, CA and Seattle, WA, through a 363 sale in its chapter 15 proceedings for a value of $358 million, of which $78 million was paid in cash.
In the context of the world’s largest ever container shipping bankruptcy, Hanjin retained A&O to negotiate the sale of its majority interest in and shareholder loans to Total Terminals International (TTI), which it jointly owned with Terminal Investments Ltd. (TIL). A&O litigated against TIL on the issue of whether Hanjin’s Korean bankruptcy filing gave it the right to dissolve TTI, while establishing a sales process to attract multiple bidders, including TIL. A&O also had to negotiate with the secured lenders of TTI, who were considering foreclosing or placing that company into bankruptcy, to buy time for the sales process to play out. Then, after the Korean court approved the sale to TIL and Hyundai Merchant Marine, A&O had to overcome opposition to the sale in chapter 15 proceedings in New Jersey by US creditors, in particular to the condition imposed by the Korean court that the cash proceeds be repatriated to Korea, which was hotly contested. After a multi-day evidentiary hearing and the first known court-to-court communication between US and South Korean judges, the sale was approved and closed in February 2017, just four months after A&O was retained.
“A fantastic result for Hanjin”
Ken Coleman (Partner, NY restructuring) commented: “This was a hard one. Both the seller and the assets were severely distressed and value was eroding quickly. The Korean insolvency process didn't line up with US process as well as some other jurisdictions and the sale was hotly contested in court by well-armed creditors. In the end, we delivered a fantastic result for Hanjin.”