Homeplus rehabilitation procedure abolished, causing a 'wide-ranging shock' to customers, suppliers, and the local economy [Homeplus, rehabilitation abolished]

[Financial News] The Seoul Bankruptcy Court's decision to abolish Homeplus' rehabilitation procedure is expected to deal a blow to customers, suppliers, and the broader local economy. Homeplus, which once shared the domestic large discount store market with E-Mart and rose to second place in the industry, is now effectively on the path to exit. That comes about 10 years after its acquisition by MBK Partners and a little over a year after it entered court-led rehabilitation, raising the prospect of significant fallout not only for the retail sector but also for local commercial districts.

On the 3rd, the 4th Division of the Seoul Bankruptcy Court, presided over by Judge Jung Joon-young, decided to abolish Homeplus' rehabilitation procedure. In general, once rehabilitation is abolished, the case moves toward bankruptcy and liquidation.
Consumers are likely to feel the impact first. Since Homeplus closed stores in May and decided to shut 37 locations, the remaining stores are also expected to struggle to keep operating if the rehabilitation process is finally terminated. In particular, in some small and mid-sized provincial cities, Homeplus has effectively been the only large discount store, raising concerns that access to everyday necessities could worsen.
The local economy is also expected to take a significant hit. Many Homeplus stores have been located near traditional markets and shopping districts, where they have served as a hub for nearby commercial activity. If the stores close, the surrounding business areas are likely to weaken as well.
Yi Jong-u, a professor in the Department of Business Administration at Ajou University, said, "In county-level areas, Homeplus store closures could deal a substantial blow to the local economy." He added, "Customers who visited Homeplus also used nearby traditional markets and shopping districts, but as that spending disappears, commercial districts could hollow out. In some areas, there is also concern about 'food desertification,' where there are no proper places to buy groceries."
Suppliers and tenant businesses are also unlikely to avoid the impact. Small merchants operating inside the stores are at risk of losing their business base. Vendors that relied on Homeplus as a major sales channel will need to secure new outlets. Employment issues for Homeplus staff and workers at partner companies will also remain a challenge for local communities.
Homeplus, however, said its chances of recovery have not disappeared entirely. In a statement released that day, the company said, "The court indicated that if 200 billion won in operating funds are secured within two weeks and an immediate appeal is filed, it could consider resuming the rehabilitation procedure." Homeplus asked Meritz Financial Group, its largest creditor, to provide operating funds. It also said, "We will actively cooperate with future legal procedures and minimize damage to stakeholders, including creditors and employees."

Experts say this case is more than the exit of a single company. They view it as a symbolic event that reflects structural change in South Korea's offline retail industry. Online shopping has already taken away demand for general merchandise, and even leisure and experiential spending has shifted to department stores and large shopping complexes, weakening the competitiveness of large discount stores.
Yi explained, "Large discount stores lost general merchandise demand to online retailers, and leisure and experiential demand to department stores and mixed-use shopping complexes." He added, "As they have lost competitiveness in both shopping and space functions, their room to survive has narrowed. Going forward, strategies that differentiate them through fresh food competitiveness, online integration, and stay-oriented spaces will determine survival."
clean@fnnews.com Lee Jeong-hwa Reporter