Court orders workout for flailing STX Pan Ocean

The Seoul Central District Court yesterday decided to begin a court-managed workout program for STX Pan Ocean, Korea’s largest bulk carrier and flagship of cash-strapped STX Group.

The decision follows STX Pan Ocean filing for a court receivership on June 7 in the face of snowballing losses which stem from the prolonged slump in the global shipping market.

Yesterday’s court decision puts two of the four big shipping companies under court protection since the 2008 financial crisis broke out.

The court appointed STX Pan Ocean CEO Yu Chun-il and corporate restructuring expert Kim Yu-sik as co-receiver-managers.

Kim has experience serving as legal manager of Daewoo Motors, an automobile arm of the now-defunct Daewoo Group, in 2003. He was recommended by STX Pan Ocean, according to the court.

“Given that STX Pan Ocean had lots of internal deals with STX Group’s other affiliates, there may be conflicting interests [between STX Group and STX Pan Ocean],” the court said in a ruling. “To help STX Pan Ocean to not get swayed by the mother company and keep focused on normalizing the company, we saw a need for a third party’s help.”

If needed, the court may seek putting STX Pan Ocean on the market, the court added. The deadline for reporting is July 18. The first meeting for the court receivership process, which maps out details for STX Pan Ocean’s normalization plans, will take place on Sept. 5. STX Pan Ocean owes a combined 4.4 trillion won ($3.9 billion) to financial institutions.

BY KIM MI-JU [mijukim@joongang.co.kr]