Blog/News

Lack of Insurance adds to Hanjin’s Woes

Sadie Keljikian, Top Billion Finance

The latest issue in the Hanjin Shipping bankruptcy scandal surrounds a lack of insurance on chassis in the US.

Chassis provider Flexi-Van Leasing has requested assistance from a federal judge to cancel all its per-diem leasing agreements with Hanjin. Flexi fears that Hanjin will send “thousands” of chassis onto US highways without proper insurance coverage.

Ever since Hanjin’s filing for protection in a Korean bankruptcy court on August 31st, significant controversy has surrounded the fate of goods, containers, and ships under the Korean shipper’s jurisdiction. Formerly the seventh-largest container shipping company in the world, Hanjin’s losses dramatically affected the international shipping and trade industries.

Flexi-Van Leasing, a New Jersey-based provider filed the motion in US District Bankruptcy Court. The claim is that Hanjin’s insurance ceased on October 10th when the shipper failed to pay its premium. Flexi-Van says that when Hanjin failed to pay its premium, thousands of uninsured chassis in Hanjin’s possession. Hanjin has suspended all deliveries except to ports, but can resume deliveries at any time, according to Flexi-Van’s filing.

The current state of affairs relating to Hanjin is concerning US creditors and customers, understandably, but the Newark court is attempting to resolve some of them. Hanjin is seeking Chapter 15 status in the US, which would allow the shipper to move forward with bankruptcy domestically.

Although the court has yet to rule on Hanjin’s Chapter 15 status, it has on many of the other issues surrounding the shipper’s recent difficulties. Keeping up has proven a challenge as the court addresses dozens of attorneys working for numerous involved parties. Cargo owners, container companies, logistics providers and terminals are just some of those approaching the court for assistance.

In the last month, the court has already determined next steps for Hanjin and its customers. The court has instructed shippers in securing release of their cargo, told Hanjin what to do in order to deliver goods to their destinations, and decided what happens to the containers and chassis after the goods have been delivered. Customers of Hanjin continue to raise issues, mostly relating to damages incurred and payments made to Hanjin.

Flexi-Van claims that Hanjin owes them $3 million for services provided prior to the bankruptcy filing and held several contracts with the shipper, all requiring insurance coverage. Flexi-Van has requested a termination of their agreements with Hanjin, as well as payment for their insurance premium. In theory, this will allow delivery of all goods to move forward as originally planned.

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