JULY 2, 2012 — Citing "severe cash flow problems," Japan's Sanko Steamship Line has filed for bankruptcy in the Tokyo District Court. A statement from the company says it has filed for under "DIP" type proceedings in which the incumbent management will act as the trustee for the reorganization. It says the management will work on the reorganization "in complete solidarity led by Hisashi Asafuji who was appointed as President and CEO today."
Following is the text of a statement issued by the company today:
"Although we had proceeded with an out-of-court workout including the turnaround ADR proceedings, we have reached a conclusion in light of our current circumstances that the best way of our reorganization is to file a petition for commencement of corporate reorganization proceedings. We, therefore, withdrew the turnaround ADR proceedings and flied a petition with the Tokyo District Court for commencement of corporate reorganization proceedings today. The Court received the petition on the same day and immediately issued a restraining order of prohibition of payment, a comprehensive prohibition order on compulsory executions and a supervision order and examination order.
"We hereby do sincerely apologize to you, who have continuously provided us with support and cooperation, for the tremendous inconvenience caused by this filing.
"Since incorporated, we had actively been expanding our spot-contract business mainly for overseas routes. However, we saw a sharp drop in the freight and charter revenue which were the main sources of our revenue because the growth of transportation demands rapidly slowed down due to the global financial crisis in the wake of the Lehman shock in September 2008, which caused a growing gap between supply and demand, and also because it was too late for us to take drastic actions for high-cost charter contracts. As a result, our profitability had rapidly and seriously deteriorated.
"Under these circumstances, we commenced the out-of-court workout proceedings and, as part of the proceedings, on 15 March 2012 we filed with the Japanese Association of Turnaround Professionals a formal application for turnaround ADR proceedings. However, we had to give up the reorganization through the out-of-court workout proceedings and had to file the petition for judicial proceedings because we have experienced a severe cash flow problem after some ship owners attached our vessels and hire claims, and withdrew their vessels as a response to our deferral payment.
"Under the corporate reorganization proceedings, a court appoints a trustee for the reorganization proceedings for a failing company to reorganize its business under the supervision of the court. As we have filed for the proceedings called "DIP type" proceedings in which the incumbent management will proceed with the proceedings as the trustee, the management will work on the reorganization of our business in complete solidarity led by Hisashi Asafuji who was appointed as President and CEO today.
"Your understanding and support would be greatly appreciated."