Court approves Homeplus restructuring plan
Summary
Homeplus secured court approval Wednesday for its restructuring plan in Seoul. The retailer’s rehabilitation proceedings will end once it begins repaying creditors under the approved plan. The Seoul Bankruptcy Court said the plan met the required support threshold, and Homeplus said it will focus on profitable stores and sell some locations to prioritize creditor repayments.
Key Facts
- The Seoul Bankruptcy Court said the restructuring plan met the approval requirement because it won support from at least two-thirds of creditors.
- Homeplus has been under court-led rehabilitation proceedings since March 4 last year.
- The proceedings were initially terminated on July 3 after Homeplus failed to raise 200 billion won in minimum operating funds, then later reinstated after Meritz Financial Group provided the needed financing.
- Homeplus was operating 67 stores as of Aug. 13 after temporarily closing them during its cash shortage.
- MBK Vice Chairman and Homeplus co-CEO Kim Kwang-il said the company plans to restore profitability by focusing on profitable stores and selling certain stores promptly.
A staff member arranges products on a shelf at a Homeplus store in Seoul, Wednesday. Yonhap
Homeplus, which is under court-led rehabilitation proceedings, secured court approval Wednesday for its restructuring plan.
The rehabilitation proceedings of the country's No. 2 supermarket chain will come to an end once it begins repaying creditors in line with the approved plan.
The Seoul Bankruptcy Court held a creditors’ meeting earlier in the day to vote on the plan. After creditors approved the proposal, the court immediately gave it the green light, formally authorizing the retailer to carry out the debt repayment and restructuring measures set out in the plan.
“The plan satisfied the requirements for approval, with support from at least two-thirds of creditors,” the court said.
It urged the retailer, controlled by private equity firm MBK Partners, to cooperate closely with its employees and business partners and do its utmost to ensure the successful implementation of the rehabilitation plan.
MBK Vice Chairman and Homeplus co-CEO Kim Kwang-il, who attended the meeting, apologized to creditors affected by the company’s rehabilitation process.
“Our priority under the restructuring plan is to restore profitability by focusing our business on profitable stores,” he said. “We also plan to sell certain stores promptly and use the proceeds to prioritize repayments to creditors.”
The court plans to close the rehabilitation proceedings once the retailer begins making repayments in full under the approved plan.
Failure to follow the schedule, however, could lead the court to terminate the rehabilitation proceedings despite the plan having been approved. The court would then have the authority to declare the retailer bankrupt without a separate application.
Homeplus has been under court-led rehabilitation proceedings since March 4 last year.
The firm’s rehabilitation proceedings were initially terminated on July 3 after it failed to raise 200 billion won ($147 million) in minimum operating funds. The process was later reinstated after its largest creditor, Meritz Financial Group, stepped in with the necessary financing.
Since then, Homeplus has resumed normal operations at 67 stores as of Aug. 13, about a month after they were temporarily closed as the company struggled to pay suppliers and landlords amid a shortage of operating funds.
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