September 20, 2016
McGuireWoods partners John Padgett and Jim Van Horn commented in a Sept. 16 Law360 article discussing legal implications of South Korean container carrier Hanjin Shipping Co.’s bankruptcy.
Padgett, co-leader of McGuireWoods’ Transportation Industry Team and managing partner of the Norfolk office, addressed questions asked by cargo owners whose goods were left stranded at sea regarding how the filing will impact their bottom lines.
In the article, Padgett explained, “The supply chain is built around delicate pieces that are often just-in-time magical events that run by algorithms and the pieces are all working together nicely. But right now, everybody in the operation side is asking, 'Do we have enough inventory to survive any kind of blip in our transportation link, and if we don't, what is our plan B?' "
Van Horn, a bankruptcy lawyer in the firm’s Baltimore office, noted how the Hanjin collapse illustrates the conflict between U.S. maritime law and bankruptcy law given the differences in prioritizing creditors' security interests and lien rights.
"You have folks coming in looking to enforce bankruptcy code provisions and other creditors just to assure themselves under black-letter maritime law," Van Horn said in the article. "There's a great deal of uncertainty."
The full text of the Law360 article, “5 Key Questions Raised By Hanjin Shipping’s Bankruptcy,” is available online to subscribers.