Homeplus clears liquidation hurdle, but what challenges remain?

Embattled retailer Homeplus staved off immediate liquidation after winning court approval for its restructuring plan, but it still faces steep hurdles to achieve a full recovery, industry watchers said Thursday.

The court's decision on Wednesday took immediate effect, formally allowing Homeplus to carry out the debt repayment and restructuring measures outlined in the plan. However, the company must stabilize its cash flow, restore normal operations, sell real estate assets and ultimately secure a new buyer to achieve a full recovery.

The retailer, controlled by private equity firm MBK Partners, entered corporate rehabilitation in March 2025 but saw the proceedings terminated last July after failing to secure the minimum 200 billion won ($147 million) in operating funds required to implement its rehabilitation plan. It later secured emergency debtor-in-possession financing from Meritz Financial Group, prompting the court to reverse the termination decision.

Immediate risks stem from administrative claims, including payments owed to suppliers, which take priority over standard rehabilitation claims.

Homeplus has 503.2 billion won in outstanding payments owed to suppliers. Under the restructuring plan, the retailer will repay the debt in installments over three years, paying 0.5 percent by February 2028, another 20.3 percent by February 2029 and the remaining 79.2 percent by February 2030.

While 64.4 percent of creditors had agreed to installment repayments as of Tuesday, court-appointed examiner Samil PwC warned that demands for immediate lump-sum payments from non-consenting creditors could trigger another liquidity crunch.

Operational recovery also remains a major challenge, as cash shortages have disrupted payments to suppliers and left stores with depleted inventories.

MBK Vice Chairman and Homeplus co-CEO Kim Kwang-il told creditors at the court hearing that Homeplus had reduced monthly rental and labor costs by more than 20 billion won and 26 billion won, respectively. But industry watchers say cost-cutting alone will not be enough, noting that the retailer must restore relations with suppliers, replenish store shelves and bring customers back to its stores.

Property sales are also central to the debt repayment strategy.

“A total of 54 stores have been closed, 19 of which are company-owned,” Kim said, adding that non-operational properties would be sold to fund debt repayments.

However, delays in selling the properties or lower-than-expected sale prices could undermine the recovery timeline.

The ultimate objective is to find a new owner for the company. Kim stressed, “Even after selling closed stores, we will pursue an M&A (merger and acquisition) of the company itself to repay the remaining debt.”

Whether Homeplus can attract a buyer will depend on its ability to cut fixed costs, restore revenue growth and rebuild its corporate value in an increasingly competitive market.

Meanwhile, Rep. Min Byoung-dug of the ruling Democratic Party of Korea said at the National Assembly earlier in the day that Homeplus had overcome a critical hurdle in a crisis affecting some 300,000 people.

He said the court’s rejection of the restructuring plan and subsequent bankruptcy would have caused widespread disruption, affecting workers, tenant businesses, suppliers, distribution channels for agricultural, fishery and livestock products, as well as local economies.

Min underscored, however, that approval of the restructuring plan does not relieve MBK of its responsibility for Homeplus’ financial troubles. He criticized MBK’s 7.2 trillion won acquisition of the retailer as a leveraged buyout that left the retailer responsible for repaying the acquisition debt, saying the company had been saddled with 2.9 trillion won in interest costs alone.

“The Assembly will hold MBK and its chairman accountable to the end,” Min said, pledging to establish clearer rules on the responsibility of private equity firms for corporate failures through parliamentary audits and legislation.