Vietnam’s State Shipbuilding Company, SBIC, Set To Declare Bankruptcy

The State Shipbuilding Company of Vietnam (SBIC) is about to file for bankruptcy as the government prepares for a major reform. The judgment comes after the Political Bureau of Vietnam recently approved SBIC and its seven subsidiaries’ declaration of bankruptcy. The resolution is being implemented under the direction of Deputy Minister of Transport Nguyen Xuan Sang, who emphasises that bankruptcy must be avoided because the corporation cannot restructure successfully. SBIC’s debt load is still relatively high compared to its overall assets.

A transfer of ownership will occur during the bankruptcy process, releasing the corporation and its subsidiaries of the weight of remaining debts. Also, profitable subsidiaries will be freed from the parent company’s debt. Vietnam’s state-run shipbuilding industry has been beset by accusations of mismanagement and cost overruns for nearly ten years. The downfall started in 2010 with the failure of Vinashin, which was later reformed into SBIC in 2013 and took on an enormous $4 billion debt from Vinashin.

The most recent evaluation by the Transport Ministry found that SBIC’s shipbuilding operations have struggled to make profits, escalating the difficulty of paying debts acquired from Vinashin. Over the past two weeks, Deputy Minister Nguyen Xuan Sang has overseen a thorough inspection of SBIC’s operations nationwide. Creating a bankruptcy roadmap to maximise asset and capital recovery is one of the following phases. According to Sang, shipyards can now transition into a new phase and take advantage of the transformation in the maritime industry towards more recent, alternative-fuel-powered vessels by filing for bankruptcy.

The revenue generated from the liquidation of SBIC and its assets will be used to settle debts, pay salaries, and provide social insurance to workers employed during the Vinashin period, all in compliance with bankruptcy regulations.

As Deputy Minister Sang emphasised, the transfer of ownership during the bankruptcy procedure allows member shipbuilding enterprises to function more effectively by relieving them of prior debts. With a focus on the ongoing need for an experienced management team and labour force inside the current firms, the goal is to establish the framework for company revival and restructuring efforts.

SBIC and its member entities will file bankruptcy petitions with the court after the bankruptcy process is finished. After that, the court will supervise the distribution of the assets, debts, and order of payment. During this process, actively running units under contract will continue with business as usual.

Reference: Splash247, Hellenicshippingnews

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Source: Maritime Shipping News