Park Han-sol reports on Korea's financial regulators, along with fintech and insurance. She previously wrote about the art world, from biennales and exhibitions to fairs and auctions, with a focus on Seoul and the figures shaping the scene. Before joining The Korea Times, she spent a year at ABC News' Seoul bureau, contributing to coverage of major Asia-Pacific events.
Homeplus appeals court's rehabilitation termination, faces uphill battle for turnaround
The entrance to Homeplus' headquarters in Seoul remains closed, Monday, as the cash-strapped retailer faces the deadline to appeal the Seoul Bankruptcy Court's decision to terminate its rehabilitation proceedings. Yonhap
By Park Han-sol
Homeplus, once Korea’s second-largest discount store chain, formally appealed a court decision to terminate its rehabilitation proceedings, Monday, after securing a 200 billion won ($135 million) emergency loan.
Although the last-minute financing may have pulled the company back from the brink of liquidation, its return to normal business remains far from assured. To stay afloat, Homeplus must rebuild supplier confidence, secure fresh liquidity and win back customers after months of disruption.
The appeal follows Meritz Financial Group’s approval of the financing on July 16, after private equity firm MBK Partners, Homeplus’ owner, and its chairman, Michael ByungJu Kim, agreed to provide joint personal guarantees for the full amount of the debtor-in-possession (DIP) loan.
While the Seoul Bankruptcy Court ended the retailer’s rehabilitation proceedings on July 3, it left the door open to reconsidering the decision if Homeplus obtained the minimum funding needed to carry out its turnaround plan before Monday’s appeal deadline.
The company’s first hurdle is convincing the court that it remains a viable going concern. Industry watchers expect it could take another one to two weeks before the court decides whether to overturn the earlier ruling and allow the restructuring to resume.
Even if the court agrees, the emergency loan alone is unlikely to put Homeplus’ finances back on stable footing.
Much of the money is expected to go toward administrative claims, which take priority under Korea’s rehabilitation law. These include unpaid wages, severance payments and outstanding bills owed to suppliers for goods delivered after the retailer entered court-led restructuring.
Administrative claims now total about 930 billion won, meaning the newly secured loan covers only a fraction of those obligations. Without additional financing, the company’s restructuring is unlikely to be sustainable.
Rebuilding its supply chain may prove just as difficult. It remains unclear whether suppliers that halted deliveries during the restructuring will resume shipments immediately. Many vendors are likely to wait until they are confident the retailer can pay them consistently before fully restoring business ties.
Winning back shoppers could prove equally challenging. Months of disruption have pushed many customers toward rival discount chains and online retailers. Homeplus will need to regain its price competitiveness and convince consumers the business has stabilized before sales can meaningfully recover.
The retailer plans to focus on improving profitability at its 67 remaining stores while completing a restructuring program that includes closing 37 locations. It also aims to revive efforts to find a new owner by pursuing the sale of its remaining business, including its hypermarket operations and online unit.
Finding a buyer, however, remains a formidable challenge. Previous sale attempts failed as prospective bidders were deterred by structural headwinds facing the hypermarket sector and Homeplus’ heavy debt burden.