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DEBT-RIDDEN HANJIN

Court allows rehab of Subic shipyard operator

05:54 AM January 16, 2019

The Olongapo City Regional Trial Court (RTC) approved on Monday the rehabilitation of Hanjin Heavy Industries and Construction-Philippines, allowing the South Korean shipbuilder a reprieve from paying its huge debts.

The decision came a week after Hanjin Philippines, which operates a shipyard on the Redondo Peninsula in Subic, Zambales province, sought a court-assisted relief from its financial woes.

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Judge Richard Paradeza directed the company to serve a copy of its ruling on creditors.

The order, he said, was pursuant to Republic Act No. 10142, or the Financial Rehabilitation and Insolvency Act of 2010.

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In its petition, Hanjin Philippines said it obtained loan credits from local banks to finance shipbuilding operations but “most of its customers attempted to evade payments or worse canceled their shipbuilding contracts.”

This led to the company’s “failure to earn revenues despite having already [built] the ships,” the company said.

The RTC noted that Hanjin would not have enough cash flow and would be “unable to repay its borrowings obtained through shipbuilding financing.”

Aside from the $900 million it owes South Korean lenders, Hanjin has $412 million in loans from the Philippines’ top five banks.

The recent loss of its tax breaks and preferential power rates as well as slackening global demand for ships have contributed to its troubles.

The court also stopped the company from “selling, encumbering, transferring, or disposing in any manner any of its properties, except in the ordinary course of its business.”

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Hanjin was prohibited from paying its outstanding liabilities unless ordered by the court.

Hanjin’s liquidity problem forced it to lay off more than 7,000 workers last month. About 3,000 more would be retrenched early this year until only 300 workers and seven Korean supervisors remained in March to maintain its facilities.

Officials of the Department of Labor and Employment (Dole) said the displaced workers were being assisted in getting their final payments and in landing local and overseas jobs.

Labor Secretary Silvestre Bello III said on Tuesday the workers would be aided in finding jobs or starting their own businesses.

Zenaida Angara-Campita, Dole director in Central Luzon, said her office had activated the department’s technical working group for job displacement concerns. —Reports from Joanna Aglibot, Tonette Orejas and Jovic Yee

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TAGS: Hanjin Heavy Industries and Construction-Philippines, Olongapo RTC, Redondo Peninsula shipyard, Richard Paradeza
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