CYL finally files for court receivership

Choyang Line Co., along with its affiliated company, Nam Buk Fisheries, filed for court receivership on May 29, and Samik Logistics Co., another Choyang affiliate, filed for court protection from creditors, the Choyang Group said after an emergency directors' meeting May 30.

After launching worldwide services in the early 1990's, it encountered financial difficulties from excessive initial investment on worldwide sales channels, increased shipbuilding finance costs, and high chartering fees, forcing the company to heavily borrow. Especially, as profitability worsened due to vessel oversupply and rates drops following the launch of its global service, it started to become apparent that Choyand's tortured financial structuring was in danger of collapse. The last straw for its financial difficulties was the Asian Currency Crisis that started near the end of 1997. At that time, an overlapping domestic and Asian economic depression brought about huge financial expenses due to skyrocketing interest rates and loans suddenly being called in.

Even though it endeavored hard to revive itself by selling off over 70 percent of its total assets, and received private donations from the company owner, it continued in its financial difficulties, unable to maintain normal operations with incurring further debts.

However, creditors expected CYL to receive additional loans after credit banks classified CYL as a viable firm. Creditors then proceeded to pressure CYL for debt payments earlier than anticipated. From early this year, creditors have been forced to sue for repayment, to seize vessels, and to conduct further business on a cash only basis. CYL overseas creditors shut down CYL operations by cutting CYL off from depo usage, stevedoring and inland transportation, as well as repossessing containers CYL had leased.

Choyang line, the main wing for the ChoYang Shipping Group, was established in 1961 and maintained stable development until the end of the 1980's. In the early 1990's, however, it prepared to make the jump into global shipping by launching worldwide container services, making an alliance with the German company DSR-Senator Lines.