By HENRY EMPEÑO | 

OLONGAPO CITY — Debt-ridden Hanjin Heavy Industries & Construction Philippines (HHIC-Phil) has been placed in a receivership by the Olongapo City Regional Trial Court (RTC) to start a court-supervised rehabilitation program for the ailing Subic Bay Freeport-based shipbuilder.

The South Korean company filed a petition before the court on Tuesday last week to initiate voluntary rehabilitation under Republic Act 10142, otherwise known as “An Act Providing for the Rehabilitation or Liquidation of Financially Distressed Enterprises and Individuals”, after it reportedly suffered insolvency due to a slump in the global shipbuilding industry.

In a four-page Commencement Order issued yesterday (January 14), Judge Richard A. Paradeza of RTC Branch 72 declared HHIC-Phil to be under rehabilitation and appointed Stefani C. Saño, a former senior deputy administrator of the Subic Bay Metropolitan Authority (SBMA), as rehabilitation receiver.

The court-appointed receiver, who is nominated by the petitioner, is placed in the custodial responsibility of the property of a company, including tangible and intangible assets and rights, in cases where the firm cannot meet financial obligations or enters bankruptcy.

In placing HHIC-Phil under receivership, the court noted Hanjin’s allegations that it obtained loan credit facilities from different local banks to finance its shipbuilding operations, but that its cash flow was adversely affected by payment schemes that were based on “pre-determined milestones in the construction (process).”

Hanjin likewise claimed that “most of its customers attempted to evade payments, or worse cancelled their shipbuilding contracts”, thereby resulting in inadequate cash flow, the court said.

Consistent with the rehabilitation order, the court also ordered HHIC-Phil to cause the publication of the Commencement Order; to deliver copies of its petition to each creditor, as well as the concerned government agencies; and to serve a copy of the Commencement Order to its foreign creditors who must receive a copy at least 15 days before the initial hearing set on Feb. 8, 2019.

On the other hand, the court ordered the creditors to file their verified claims within five days before the Feb. 8 hearing, and for the creditors and concerned government agencies, as well as all interested parties “to file and serve to HHIC-Phil Inc. a verified comment/opposition to the petition, together with their supporting affidavits and documents within 15 days before the initial hearing.”

At the same time, the court prohibited HHIC-Phil’s suppliers of goods and services from withholding the delivery of supplies “for as long as HHIC-Phil Inc. makes payments for the said goods and services”.

It also authorized the shipbuilder to pay its administrative expenses “as they become due.”

Likewise, 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 HHC-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 Commencement Order was set by court to retroact to the date of the filing of the Hanjin petition.

Before filing for voluntary rehabilitation, HHIC-Phil was the biggest investor and employer in the Subic Bay Freeport Zone, with foreign direct investments placed at US$2.3 billion.