Hanjin Shipping is bankrupt, a South Korea court ruled Friday. The company's financial status and ships had been left in limbo for months and creating concern throughout the global shipping industry.
Hanjin, the world's seventh-largest container shipper, applied for a court receivership last August after the company's creditor banks ended support.
After Hanjin went into receivership, the company's woes continued to multiply where it became clear that bankruptcy could be a realistic option.
"Stopping the credit line immediately results in an inability to purchase fuel, it immediately results in vessels not being able to go to port and it immediately results in all customers going to the competitors," Lars Jensen, of Sea Intelligence Consulting, told BBC News.
The broadcaster said investors continued to lose money after August as job cuts continued and Hanjin ships became stranded at sea because ports started to refuse them entry on fear they may not get paid.
Some debtors had issued warrants to get some of their money back, leading to the arrest of some ships that did dock.
"The court will, through the bankruptcy process, make efforts so the maximum of debt repayment will be conducted in a way that is fair and balanced to the creditors," the Seoul Central District Court stated, according to Reuters.
Agence France-Presse reported the Hanjin bankruptcy could result in the loss of thousands of jobs, but the company had fallen into a crushing debt of $5.37 billion. A global trade slump and a downturn in business from China helped lead to the financial situation, AFP wrote.
The job loss estimated at about 3,000 would include those employed working directly for the company and its suppliers, noted AFP.
According to the Journal of Commerce, Hanjin has a fleet of 98 container vessels and is represented in some 60 countries with about 6,000 employees.
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