Homeplus stands at a crossroads as the rehabilitation court approaches its decision deadline, with the company's fate hanging between restructuring and liquidation. While Homeplus seeks to proceed with its previously submitted rehabilitation plan, mounting difficulties in securing the prerequisite funding are intensifying pressure toward liquidation. Some industry observers suggest that MBK-led restructuring outside court supervision may be the more realistic alternative.
According to retail industry sources on June 2, the Seoul Rehabilitation Court's 4th Division (Presiding Judge Jung Joon-young) plans to decide on the approval of Homeplus's rehabilitation plan and whether to continue proceedings around June 4. Under current law, rehabilitation plans must be approved within one year of the procedure's commencement date. However, the court may extend this deadline by up to six months if necessary. Homeplus initiated proceedings on March 4 last year, making the first approval deadline imminent.
Homeplus's sale process has been spinning its wheels throughout this period. Last May, Samil PricewaterhouseCoopers announced that Homeplus's liquidation value exceeded its going-concern value by 1.2 trillion won, yet the rehabilitation court chose to provide an opportunity for sale rather than liquidation. However, when the M&A main bid opened in November, no prospective buyers emerged. Homeplus subsequently submitted a plan to the court in December proposing to sell off its Express business division separately rather than pursue a whole-company sale, while obtaining 300 billion won in debtor-in-possession (DIP) financing to normalize operations. The court's pending decision concerns whether to approve this very plan.
Industry observers are skeptical about approval of the plan as submitted, given questions about its fundamental viability. The plan's core premise—securing 300 billion won in DIP financing—has stalled from the start. Major creditors Meritz Securities and Korea Development Bank have both declined to provide funding support. KDB Chairman Park Sang-jin stated at a press briefing on May 25, "We have no involvement with Homeplus," rejecting the DIP funding request. Only MBK Partners has indicated willingness to disburse 1 billion won initially, contingent on replacing the court-appointed administrator, with an additional 100 billion won loan if rehabilitation proceedings are extended. MBK Chairman Kim Byung-joo has put his back against the wall by offering personal assets including his residence as additional collateral for the initial 100 billion won support loan. This is interpreted as priming pump to resolve immediate operational disruptions and encourage funding support from policy financial institutions.
If the court determines the plan's prospects are dim, a "rejection decision" declining the rehabilitation plan may be issued. Extending the approval deadline by six months is also being discussed, though this too is not seen as a fundamental solution. A retail industry official noted, "Looking at the rehabilitation plan, it's ultimately a structure that can only be completed when a buyer emerges," adding, "With both funding and buyers uncertain, extending rehabilitation can hardly mean more than buying time." Under the plan, secured rehabilitation claims and trade receivables would be paid first, while other rehabilitation claims would be deferred until M&A completion. If acquisition efforts are delayed or fall through, the deferred debt repayment issue would inevitably resurface.
Some in the retail industry are suggesting out-of-court restructuring as an alternative. This approach would use the 200 billion won MBK has committed as restructuring capital outside court proceedings to stabilize operations first before seeking investors. The observation is that faster, more flexible external negotiations and fund management could be more advantageous in preserving Homeplus's already crumbling business network.
However, this alternative could also lead to bankruptcy and liquidation if external funding is delayed. A retail industry official said, "If it converts to liquidation, the ripple effects across the entire retail ecosystem—store network dissolution, massive employment shock, and cascading damage to suppliers—are difficult to fathom," adding, "If one pillar of the hypermarket sector exits the market, restructuring of commercial districts and the overall retail industry structure will be inevitable."