Struggling Japanese bulker operator Daiichi Chuo Kisen Kaisha was given the green light by the Tokyo District Court to start civil rehabilitation on 5 October.
The company applied for civil rehabilitation on 29 September after four consecutive annual losses.
Unlike restructuring that is led by the courts, civil rehabilitation depends on the willingness of the subject company’s business partners and creditors to work with it to resolve its debts.
The court has given creditors until 7 December to file claims, while Daiichi Chuo has until 25 December to assess and declare its assets.
From then, creditors have until 5 January 2016 to accept or dispute Daiichi Chuo’s declaration of its assets.
The submitted claims will be investigated from 12-19 January 2016 and Daiichi Chuo has until 3 February 2016 to submit a rehabilitation plan.
Daiichi Chuo claimed in a Chapter 15 filing in the US that it owed about USD1 billion to 596 creditors, including Hyundai Merchant Marine, Navios, Vale, Rio Tinto Shipping, and Pan Ocean.
While the Tokyo court has suspended repayments of Daiichi Chuo’s debts, the company has obtained approval to continue paying for running expenses to ensure business continuity.
These include purchases of ship parts, crew wages, employees’ salaries, bunkers, port fees, payments for ship repairs, and shipbrokers’ commissions.
In its Chapter 15 filing, Daiichi Chuo claimed it controlled 185 ships, of which 45 were owned and the rest chartered-in.
As of 1 August, the company had 224 employees, of whom 162 are land-based (including two seconded workers), 23 are sea-based (crew), nine are temporary staff and trainees, one is a part-time employee, three are contract employees, and 26 are local employees of overseas affiliates and branches. All but 26 of the employees are located in Japan.
Mitsui OSK Lines, which became the company’s major shareholder in 2013, is expected to take a hit as Daiichi Chuo will be delisted from the Tokyo bourse by 30 October.