South Korea’s Hanjin Shipping Co., once the world’s seventh largest container carrier that is currently under court’s protection, is most likely to liquidate, ending its 39-year history shared with the country’s shipping industry.

According to multiple sources from the legal circle and shipping industry on Monday, Samil PricewaterhouseCoopers (PwC) on Tuesday will deliver its due diligence report that is expected to include an assessment recommending liquidation of Hanjin Shipping, instead of the company maintaining operations, to the Seoul Central District Court that has been handling Hanjin’s insolvency proceedings. The accounting firm was appointed by the court in September to review the debt-ridden shipper’s assets and financial conditions after the country’s biggest shipping companied failed for court’s receivership on August 31.

The Industry sources noted that PwC has estimated in the report that the value of Hanjin Shipping’s liquidation, or going out of business, would reach 1.9 trillion won ($1.6 billion), more than double 800 billion won, the value the company could generate when it remains in operation. The court will make a final decision based on the evaluation from PwC.

It is a wide view in the country’s legal circle that Hanjin Shipping would eventually be liquidated. More than 90 percent of its vessels have been already sold off and next month, a majority of its employees are expected to join Samra Midas Group, the owner of Korea’s bulk carrier Korea Line Corp. that has recently been selected as preferred bidder to buy Hanjin Shipping’s Asia-United States route. Industry observers noted that even if the ailing container carrier manages to survive, it would have no base for operations.

A creditor official of Hanjin Shipping who asked to be unnamed said creditors plan to dispose Hanjin Shipping’s remaining assets.

Once Hanjin Shipping dissolves, the Korean shipping industry that once thrived in the global market is expected to shrink significantly. According to global container shipping analyst Alphaliner, as of Monday, Korea’s container ship capacity is 510,000 twenty-foot equivalent units (TEU), more than halved from 1.06 million TEU tallied before Hanjin Shipping entered into court receivership.

If the court begins liquidation procedure of Hanjin Shipping based on the due diligence report delivered by PwC, the container carrier that has led the growth of the nation’s shipping industry is expected to disappear in history despite having overcome many challenges including the global oil shock and the Asian financial crisis in late 1990s. Most of its assets have been sold after it entered into court’s protection after failing to secure funds requested by creditors including Korea Development Bank.

The national-flag container carrier was founded in 1977 and once operated about 150 vessels to deliver via 70 global routes with around 5,000 employees across 60 countries.

By Kim Jung-hwan and Kim Yoon-jin

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