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BIFA information regarding Hanjin

Decision of Hanjin Board to unanimously agree to file for Receivership. Suggested action regarding containers on hold or on the water.

Following the decision of key lenders to withdraw support from the ailing shipping line company Hanjin (whose support was allowing potential restructuring of debt and continued trading until withdrawal) the Board has decided to proceed with Receivership. Appointment of a Receiver will follow and everything will be handled by this party from now on. Inevitably once the withdrawal occurred the Directors were unable to trade and boxes have begun to be held. 

How are members of BIFA able to manage the situation? 

The holding of boxes by a shipping line about to enter receivership because the company is no longer able to trade is an event that members cannot have avoided. Some of the consequences of which members will be unable to prevent by exercise of reasonable diligence under clause 24(B) of the BIFA Terms. BIFA Members should advise their customers of the position and seek instructions as soon as possible. It is likely to take time for the Receiver to come in and manage the situation and start the laborious process of managing the containers held by the company. Those with substantial claims against the company may begin the process of arresting Hanjin ships to cover any expected losses. This may cause unloading delays.

In situations such as these, management of customer expectation is paramount. They need to be advised of the situation and how it may develop and that there is likely to be a delay which may be difficult to quantify although once contact is made with the Receiver BIFA Members will be able to keep customers informed of the latest information being provided by the Receiver as to timing and release of boxes. If the contract made with the shipping line was door to door, it may be necessary to pay some charges again to facilitate delivery. Your customers may need to decide whether or not to arrange a replacement shipment for their customers and take the current container loads back into stock as far as their own customers are concerned.  Members may have contracts with lines and credit facilities. Pressure may have to be applied against the Receiver to facilitate release in such circumstances and early payment again may facilitate earlier release.

It is inevitable that some customers will seek to make claims. Insurers in the market will no doubt be aware of what is happening but Members should notify them of potential claims if containers are being held.

Each case of held containers will need to be considered carefully – have the BIFA terms been properly incorporated in the agreement with the customer and therefore may they be relied upon? If not what terms apply? Has a specific logistics agreement been entered into with the customer? Has the member acted as agent or principal? If the member is allowed to sub contract do the contractual terms require them to maintain liability as carrier? Has any claim been made by the customer? Are the goods perishable? Are they subject to fluctuating market value that may make them worthless if they cannot be released quickly? If the customer begins to apply pressure it may be worth seeking advice from insurers or a solicitor.

Make sure that any conversations with the customer and the Receiver are fully recorded in case they need to be referred to at a later date in relation to claims. These situations are never easy to deal with when insolvency of a party ensues as the company can no longer trade and the Receiver has to deal with the company business. Delays are therefore inevitable as the changeover occurs but prompt attention to detail, keeping the customer advised and taking appropriate advice where needed may make the passage of a difficult situation run smoother.

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