HHIC-Phil under court protection but seeking new owner
Hanjin Heavy Industries and Construction-Philippines (HHIC-Phil), the largest shipbuilder outside of the three leading Asian nations, has been officially put into receivership the Olongapo City Regional Trial Court.
The financial collapse of the shipbuilder has jeopardised a number of local banks which are owed over $400Mn. It also owes around $900mn to other banks mostly in South Korea. In a four-page Commencement Order issued on Monday the court declared HHIC-Phil to be under rehabilitation and appointed a rehabilitation receiver.
HHIC-Phil has blamed its ills on the method of payment for new ships whereby monies are paid over only when certain stages of construction are reached along with cancellations and deferred delivery dates.
The court order allows the yard to continue operations and protects it from actions by suppliers to cease deliveries as long as the yard is making payments. In compliance with the Financial Rehabilitation Rules of Procedures, the court suspended “all actions or proceedings in court or otherwise, for the enforcement of all claims” against HHIC-Phil and “all actions to enforce any judgment, attachment or other provisional remedies against HHIC-Phil.” However, it barred HHIC-Phil from “selling, encumbering, transferring, or disposing in any manner any of its properties except in the ordinary course of its business,” as well as from “making any payment of its outstanding liabilities from the issuance of this Commencement Order.”
The order also allows for the company to find investors that can take over the operation of HHIC-Phil shipyard in Subic, as well as to help its employees, who have carried the brunt of the company's financial woes. In December 2018, the company laid off more than 7,000 workers.
Interest is reported from Chinese buyers but other reports also say that there are more than commercial interests to be considered. The Philippines Department of National Defense Secretary Delfin Lorenzana on Monday said they will monitor those who have expressed interest to invest in the bankrupt shipbuilder. "We defer to the economic team in this area. But we are interested to know who are coming to invest," he said, noting that the HHIC-Phil is near the Philippine Navy's major docking and anchorage area of its large naval vessels.