Court ends rehabilitation process for troubled retailer Homeplus
A man rides a bike past a Homeplus store in Seoul, Thursday. Yonhap
A court decided Friday to terminate rehabilitation proceedings for troubled discount store chain Homeplus, pushing the company closer to shuttering its doors as it struggles to find a buyer.
The Seoul Bankruptcy Court rejected Homeplus' revised rehabilitation plan submitted earlier this week, noting the company failed to come up with the necessary funds of at least 200 billion won ($130 million) to carry out the plan.
The retailer, wholly owned by private equity firm MBK Partners, has become financially strapped due to a slump in the discount store industry and entered court-led rehabilitation proceedings in March last year.
Homeplus had submitted an initial rehabilitation plan in December before handing its revised plan to the court on Tuesday.
"In order to carry out the rehabilitation plan in the current situation, at least about 200 billion won is needed, which has yet to be secured," the court said. "As there is no possibility of the plan being carried out ... the rehabilitation proceedings have been terminated."
MBK Partners acquired a 100 percent stake in Homeplus in 2015 from British retailer Tesco Plc for 7.2 trillion won.
Once the country's second-largest discount store chain, Homeplus at its peak operated more than 140 stores nationwide.
However, the retailer's financial condition deteriorated as the discount store industry weakened, eventually leading to its court-supervised rehabilitation.
Efforts to secure additional funding were also hindered by a prolonged dispute over responsibility between MBK Partners and Homeplus' largest creditor, Meritz Securities.
Homeplus may appeal the court's decision within 14 days. If it does not, the ruling will become final.
Even if the company files an appeal, however, industry observers say the chances of successfully reviving the rehabilitation process remain slim, as Homeplus would still need to resolve its funding shortfall within the two-week appeal period.
If the ruling becomes final, Homeplus is expected to enter separate bankruptcy proceedings later this month.
As of the end of last month, Homeplus employed about 12,000 workers. Roughly another 1,000 people indirectly employed in services could also lose their jobs.