Gov't to support Homeplus workers, partners amid botched rehabilitation

Korean supermarket chain Homeplus in Seoul / Yonhap

Korea will make efforts to support employees and partner companies of troubled discount store chain Homeplus after a local court decided to terminate its rehabilitation proceedings, the finance ministry said Friday.

The meeting, chaired by the Ministry of Finance and Economy, came after the Seoul Bankruptcy Court decided to terminate rehabilitation proceedings for Homeplus in a move that could pave the way for the company's dissolution.

The company earlier pledged to reorganize its business but did not specify how it would secure the necessary funds of at least 200 billion won ($130 million).

During the meeting, the government unveiled financial support measures for employees of Homeplus, including up to 21 million won to compensate for unpaid wages.

Korea will also offer low-interest loans of up to 10 million won at a rate of 1.5 percent within the amount of their unpaid salaries.

The government will additionally provide around 440 billion won worth of liquidity support for small merchants and businesses that rely on Homeplus as a major business partner.

Businesses wishing to shut down can also receive up to 6 million won in support for closure costs, along with legal consultations.

"The government will hold weekly task force meetings (on the Homeplus issue) to closely review damage caused to workers and partner companies, along with progress in supporting them," the finance ministry said in a release.

"We will also examine the potential impact on regional economies following store closures in the provinces and come up with measures to fundamentally bolster the country's retail industry," it added.