Homeplus faces deepening survival crisis; union calls for government aid

Homeplus, which is undergoing court-led corporate rehabilitation, is facing a deepening survival crisis amid mounting financial difficulties, including unpaid supplier bills, delayed wages and overdue utility payments, industry officials said Wednesday.

The company's prolonged search for a buyer has added to uncertainty over its future, prompting its labor union to urge the government to provide emergency funding to prevent further job losses.

The major supermarket chain filed for rehabilitation with the Seoul Bankruptcy Court in March last year following a credit rating downgrade. It subsequently suspended operations at some stores before reopening some of them in mid-August this year, but continues to struggle with weak sales and supply disruptions.

According to industry insiders, Homeplus failed to fully settle payments in cash to some fresh food suppliers on Oct. 30. The retailer paid 90 percent of amounts owed for agricultural and seafood products in cash, offsetting the remainder against existing supplier deposits. Payments for meat and deli products were covered entirely by those deposits.

Some suppliers are reportedly refusing further deliveries until the amounts covered by their deposits have been exhausted, raising concerns over additional supply disruptions.

The cash crunch has also affected employees. Homeplus still owes workers half of their August salaries, while payments for September and October remain uncertain.

The retailer also canceled a voluntary retirement program involving around 400 applicants after failing to secure severance funds.

Some shuttered stores have reportedly received electricity disconnection warnings over unpaid bills totaling about 10 billion won ($7.5 million).

Recent sales, meanwhile, have fallen below 30 percent of the company's target, further straining its finances.

Efforts to find a buyer have also stalled. Homeplus and its sale adviser, Samil PwC, dropped their original end-October bidding deadline after failing to attract a clear buyer.

“Uncertainty over the scale of liabilities and the challenges associated with restructuring appear to be discouraging prospective buyers,” a retail industry official said.

As the crisis deepens, the Homeplus labor union has called for government intervention, warning of further store closures and job losses.

"Unless a potential buyer emerges soon, it will be difficult to avoid the worst-case scenario of all stores suspending operations again," the union said at a press conference at the National Assembly on Nov. 3. “The government must take responsibility for mediation and support alongside efforts to attract a private buyer. It should come up with practical measures to normalize operations, including securing emergency operating funds.”

The government announced a 550 billion won support package in July, largely consisting of indirect assistance such as low-interest livelihood loans for former employees.

The union wants the assistance redirected toward operating expenses, but authorities remain reluctant to provide direct financial support to a private company.

Beyond its liquidity problems, Homeplus faces structural challenges as the shift toward online shopping weakens traditional hypermarkets.

“Even if executed, emergency funding alone will not be enough to ensure Homeplus’ survival,” another retail industry official said, stressing that the company also needs to rebuild relationships with suppliers, stabilize its supply chains and improve its competitiveness.