South Korea’s STX Offshore & Shipbuilding Co. is likely to be placed under court receivership after years of financial assistance failed to keep it afloat, the Wall Street Journal reports.
The midsize shipbuilder may be declared insolvent by the end of the month, its main creditor, state-run Korea Development Bank, said after a meeting with other lenders on Wednesday.
“For STX to get new shipbuilding orders is nearly impossible under the current situation while its operating losses are widening,” KDB was quoted as saying.
“We judge a receivership unavoidable.”
The creditors will decide whether STX Offshore will be put under receivership by early next week, KDB added.
An oversupply of vessels and low freight rates have weighed heavily on the operations of global shipbuilders.
In South Korea, the government aims to overhaul the country’s shipping and shipbuilding industries. One way is for creditors to lead the sector’s consolidation through restructuring of debt-laden companies.
If ailing companies fail to go along, they will be forced into bankruptcy or receivership, officials said.
STX Offshore is a unit of STX Corp., whose business areas include energy, machinery and shipping.
Once Korea’s fourth-largest shipbuilder by revenue, STX Offshore has been under creditors’ control since April 2013 after running up huge operating losses and piling on debt, the Journal said.
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