MBK says Homeplus' accounting was lawful, rejects prosecution's claims
Homeplus' Dongdaemun branch in Seoul holds its final day of operations, Nov. 30, 2025, as the supermarket chain undergoes court-led corporate rehabilitation. Yonhap
Homeplus’ accounting practices were lawful and MBK Partners Chairman Michael ByungJu Kim played no role in the matter, the private equity firm said Monday, rejecting the prosecution’s allegations and media reports.
MBK, the largest shareholder of the country’s second-largest supermarket chain, also said the conversion of redeemable convertible preferred shares (RCPS) issued by Homeplus and the revaluation of its land assets were legitimate accounting measures carried out in full compliance with applicable accounting standards.
The remarks came as detention hearings are set to take place at the Seoul Central District Court for Chairman Kim, MBK Vice Chairman and Homeplus co-CEO Kim Kwang-il, MBK Vice President Kim Jeong-hwan and Homeplus Chief Financial Officer Lee Sung-jin.
Last week, the Seoul Central District Prosecutors’ Office requested arrest warrants for the four in connection with Homeplus’ controversial filing for court-led rehabilitation in March last year.
“Chairman Kim had no involvement in the accounting matters at issue,” an MBK official said. “The appropriateness of accounting treatments must be assessed at the corporate level, in accordance with applicable accounting standards and established procedures. Attempting to attribute such matters to the personal responsibility of a shareholder is inconsistent with both the factual record and accepted accounting practice.”
Prosecutors suspect that MBK carried out accounting irregularities. They argue that shortly before Homeplus sought court-led rehabilitation, on Feb. 26 last year, a special-purpose company, established by MBK to acquire Homeplus, transferred the redemption rights for RCPS with a balance of about 1.1 trillion won ($749 million) to the retailer. As a result, the instruments were treated as equity rather than liabilities, a classification prosecutors say does not comply with accounting standards.
In response, MBK said the equity reclassification of the RCPS was conducted following an objective review by an external accounting firm and in line with relevant accounting standards. The move was intended to more accurately reflect the economic substance and rights associated with the instrument.
Prosecutors also claim that MBK artificially inflated Homeplus’ financial statements to reduce its debt ratio ahead of the rehabilitation filing. They allege that when Homeplus revalued its land assets in May last year, the assets were assessed at around 700 billion won — nearly double their actual market value.
Denying the allegation, MBK said the revaluation was carried out based on objective appraisals by government-licensed valuation firms. It added that similar revaluations have been undertaken by other real estate-heavy companies, including Lotte Shopping and Hotel Shilla.
“The revaluation was undertaken to provide investors and other stakeholders with more accurate financial information, as property values had risen substantially over time while no revaluation had been conducted for an extended period, resulting in a significant gap between book values and fair values,” the official said.
He added that the adjustment was noncash in nature and had no direct impact on short-term liquidity or payment capacity.
“In conclusion, the prosecution has portrayed accounting treatments that were lawfully conducted under applicable accounting standards and were unrelated to the rehabilitation filing as improper, and then used that characterization to argue that the rehabilitation process itself was pursued with wrongful intent,” the official said. “This argument lacks logical coherence, and these issues will be fully and clearly addressed before the court.”