The Seoul Bankruptcy Court's 4th Rehabilitation Division, presided over by Chief Judge Chung Joon-young, approved the rehabilitation plan submitted by Homeplus on Feb. 2. The court confirmed the plan immediately after secured creditors, shareholders and rehabilitation creditors all voted in favor at a meeting of interested parties held the same day.
Secured creditors and shareholders each voted 100% in favor, clearing the required approval thresholds of 75% and 50%, respectively. Among rehabilitation creditors, holders of 1.88 trillion won of the total 2.48 trillion won in claims backed the plan, for an approval rate of 75.90%, above the 66.7% threshold. "Considering that more than two-thirds of creditors consented, we find that the requirements for approving the rehabilitation plan have been met," the court said.
With the plan approved, Homeplus has averted the immediate risk of closure and can begin executing it. The plan centers on shutting loss-making stores and shrinking the business around 67 profitable outlets. The company aims to generate profits by cutting rent and labor costs, and to repay debt by selling 19 company-owned properties among the 37 closed stores by February 2028.
Homeplus has already cut its store count to 67. The immediate task is selling the 19 properties, with proceeds to be used first to repay trust-secured claims currently held by Meritz Financial Group. Once those are repaid, security interests on the remaining company-owned stores will be released, allowing Homeplus to borrow from financial institutions.
After fully repaying the trust-secured claims and releasing the collateral, the company plans to use 38 company-owned properties among the 67 stores still in operation as new collateral to borrow about 600 billion won. That would allow it to begin repayments in earnest. Rehabilitation claims will be repaid in installments from the fifth through the 10th year of the plan. After the real estate sales, Homeplus also plans to pursue a merger or acquisition of the company itself.
Industry watchers say the risk of a cash shortfall remains. Public-interest claims, such as supplier payments incurred during the rehabilitation period, rank ahead of the rehabilitation claims approved on Feb. 2. Holders of 66.3% of public-interest claims have agreed to installment repayment, but if the remaining 33.7% demand immediate payment of overdue amounts, the risk of an operating cash shortage rises. Samil PwC, the court-appointed examiner, told the creditors' meeting: "No unusual findings were identified in the plans for generating cash flow from operations, selling company-owned stores and securing new borrowings, so we judge the plan feasible." It added, however, that "public-interest creditors who did not agree to installment repayment could demand lump-sum payment, and if the amount of non-consenting claims exceeds carried-over cash, a liquidity shortage could occur."
Securing merchandise supply, a prerequisite for normalizing operations, is another variable. Unlike typical hypermarkets, which pay suppliers after delivery, Homeplus currently pays many suppliers upfront before receiving goods. If sales fall short of expectations, the company could lack funds to buy inventory, creating a vicious cycle of further declining sales.
Industry officials say that while Homeplus has escaped the threat of having its rehabilitation proceedings terminated, uncertainty remains high. "The prime assets have already been sold and mostly lower-quality stores are left, so securing liquidity through sales will take considerable time," an official in the restructuring industry said. "If the real estate sales are delayed or an additional M&A falls through, the long-term repayment plan could also run into trouble."
The Homeplus labor union welcomed the court's decision. "We strongly welcome the Seoul Bankruptcy Court's decision to approve Homeplus's rehabilitation," the Homeplus General Union said, calling it "the result of the blood, sweat and sacrifice of frontline workers and of society's hope that Homeplus must be saved." It added, "Now MBK and management must be held accountable."
Homeplus entered rehabilitation proceedings on March 4 last year with the Seoul Bankruptcy Court's approval, but the process was terminated on July 3 after its sale was delayed and sales declined while public-interest claims mounted. It reopened on Aug. 13 after Meritz Financial Group provided 200 billion won in emergency operating funds. Homeplus is currently operating smaller store formats to cut costs, focusing sales on fresh food and private-brand products.
