Homeplus's corporate rehabilitation fate will be determined this week as the court's decision deadline approaches. The key issues are whether the rehabilitation plan will be approved to continue proceedings, or rejected due to lack of feasibility—potentially leading to liquidation. Doubts about the plan's viability are growing as the 300 billion won ($210 million) debtor-in-possession (DIP) financing, a core prerequisite, faces difficulties.
According to retail industry sources on March 3, the Seoul Bankruptcy Court's 4th Rehabilitation Division (presided by Chief Judge Jung Jun-young) plans to decide on Homeplus's rehabilitation plan approval and procedural continuation around March 4. Under current law, rehabilitation plans must be approved within one year of proceedings commencement, with courts able to extend deadlines by up to six months if necessary. Homeplus entered rehabilitation proceedings on March 4 last year, meaning its first approval deadline has arrived.
The sale process—a prerequisite for rehabilitation—has effectively stalled. In May last year, Samil PwC assessed liquidation value at approximately 1.2 trillion won higher than going-concern value, but the court granted a sale opportunity instead of immediate liquidation. However, no bidders emerged at the M&A auction held in November.
In response, Homeplus submitted a revised plan to the court in December, proposing to normalize operations through a partial sale of its Express division and 300 billion won DIP financing, rather than a full company sale. Whether to approve this plan is the core issue in the upcoming decision.
Funding remains the critical problem. The 300 billion won DIP financing—the plan's key prerequisite—has made no progress. Major creditors Meritz Securities and Korea Development Bank (KDB) appear reluctant to provide support. KDB Chairman Park Sang-jin said at a press conference on February 25, "We have no connection to Homeplus," rejecting the DIP request.
Only majority shareholder MBK Partners has expressed conditional willingness, offering to initially provide 100 billion won contingent on replacing current management, with an additional 100 billion won loan if rehabilitation proceedings are extended. MBK Chairman Kim Byung-joo demonstrated commitment by offering personal assets including his residence as collateral for the initial 100 billion won. Industry observers interpret this as "pump-priming" aimed at minimizing business disruption and encouraging policy lender participation.
However, industry experts point to structural limitations in the rehabilitation plan itself. One retail industry source said, "Looking at the plan, it ultimately requires a buyer to be complete. With both funding and buyers uncertain, extending rehabilitation is little more than buying time." Under the plan, secured rehabilitation claims and trade receivables would be repaid first, while remaining rehabilitation claims would be deferred until M&A completion. If acquisition efforts are delayed or fail, deferred debt repayment issues could resurface.
The court may issue an "exclusion decision" rejecting the plan if deemed unfeasible. Extending the approval deadline by six months has been discussed, but the prevailing view is that structural problems cannot be resolved without a fundamental funding solution.
Some suggest out-of-court restructuring as an alternative. This approach would use MBK's committed 200 billion won outside rehabilitation proceedings to stabilize operations before seeking investors. The logic is that fund management and negotiations would be more flexible outside court supervision, potentially better preventing short-term operational collapse.
However, concerns persist that delayed external funding could ultimately lead to bankruptcy and liquidation. Another retail industry source said, "If it shifts to liquidation, impacts including store network dissolution, massive employment shocks, and cascading damage to suppliers are inevitable. If one major hypermarket pillar exits the market, reshaping of commercial districts and the entire retail industry structure will follow."