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Troubled South Korean carrier Cho Yang Line has moved a step closer to insolvency after reportedly applying to Korean courts to go into receivership on Tuesday, informed sources say.

The carrier's Hong Kong office has stopped operations, pending instructions from its head office in Seoul. Both Hongkong International Terminals and CSX World Terminals Hong Kong, which handle Cho Yang's business, could see a slight reduction in revenues with the stoppage of the carrier's operations.

A member of Cho Yang's office staff in Hong Kong said: 'We have been instructed to stop taking orders until further notice.'

Cho Yang has closed its agency offices in Bremen and Hamburg, and in New Jersey.

Charles McCann, former vice-president for sales and marketing in the United States, was quoted as saying: 'Korean law is complicated, but when a company wants to go into receivership, they must petition the courts, which will then review the case. But the court's decision is subject to approval from the government.'

The process of going into receivership could take two months to complete.

Hong Kong Shippers' Council director Sunny Ho said the council had received complaints from shippers that they were unable to collect cargo because Cho Yang's contractors - feeder-service operators - refused to deliver the containers, saying that the carrier owed them money.

Mr Ho said the council had called Cho Yang and company officials said there was not much they could do until matters were cleared up at head office.

'Basically, the carrier has stopped all its services to the US,' he said.

Initially Cho Yang had intended to slot charter space from its own alliance members Hanjin/ Norasia. It also had stopped its sailings to Europe.

Cargo owners have suffered months of upheavals with cash-strapped Cho Yang. This year, the carrier has been caught in ship delays as owners detained vessels for non-payment of charter fees.

Last month, United Alliance partners Hanjin and Senator dropped Cho Yang, fearing customers would identify them with Cho Yang as unreliable carriers. This appeared to be the last straw for shippers, who also deserted Cho Yang, which is now carrying no cargo on any major trade lanes, according to a source.

Cho Yang, whose president is Park Jae-woo, was supposed to have struck a deal with the Islamic Republic of Iran Shipping Line last week, but details were still not finalised then.

A source said the seizure of Cho Yang's vessels by its creditors had disrupted business.

'Once [Cho Yang's] ships were seized, the US Federal Maritime Commission pounced on the carrier and revoked its vessel-operating cargo-carrier status on the transpacific,' he said.

Hanjin said on Tuesday it could offer Cho Yang slots on its vessels as long as the carrier could keep its payments current.

Operations staff at the Port of New York and New Jersey have said they were fielding many calls a day from shippers attempting to secure the release of their cargo but the line was failing to give information to its clients or port staff.

Art Svensson, former line manager on the Atlantic and traffic manager for North America, said the closure of Cho Yang America was not announced because the company did not know when it would happen.

'We had no debts but we didn't have any business either and Seoul [the head office] intends to start a service to [Los Angeles] from Asia. [Cho Yang] America may return then as a smaller company than it was or [Cho Yang Line] may run the service with an agency, but [Cho Yang] America could not wait for that to happen,' he said.

The Hong Kong Shippers' Council has advised shippers affected by the Cho Yang troubles to make deals directly with feeders and terminals to get their containers released.

The company Web site says Cho Yang Shipping was established in 1961. Subsidiaries include Samik Logistics, meat-processor Jinju Ham and Hansin Mutual Saving and Finance. Its fleet size is given as 16 vessels, including the Choyang Zenith and Choyang Honour, each of 3,300 teu (20 ft equivalent units).



Troubled carrier's HK office stops operations as it awaits word from Seoul