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The same thing that happens to other shipping segments when the market crashes:
- ship valuations adjust to reality (i.e. crash and burn)
- shipping companies appear to be losing billions as the book values of their vessels are adjusted to the new reality, while in fact cash flow is only impacted by the worsened market conditions which is nowhere near as bad as the losses imply
- banks now find that their loans are no longer backed by these super-valuable assets and have only two options: auction the ship for a pittance or bend over and accept massive loan haircuts
Either way the banks lose, and will eventually get bailed out by taxpayers one way or the other.
Even if the banks take the covenant-pill and start selling off ships to survive, who is going to buy them even for a pittance? Most likely some new and unburdened company who will hire the same people from the bankrupt companies, because they're the ones with experience. They won't lose.
