Court Says Homeplus Must Secure Consent from Priority Creditors, Emerging as a Late Variable in Rehabilitation

[Financial News] The Seoul Bankruptcy Court has asked Homeplus to obtain consent from priority creditors ahead of the creditors' meeting for approval of its rehabilitation plan, making the consent rate for installment repayment a key factor in whether the plan is approved.
According to industry sources on the 28th, the Seoul Bankruptcy Court requested that Homeplus secure consent from priority creditors for installment repayment of priority claims before the creditors' meeting scheduled for the 2nd of next month. The court is understood to be reviewing whether the plan is feasible, as failure to carry it out properly could increase losses for stakeholders.
Priority claims are debts such as trade payments and wages incurred during rehabilitation proceedings, and they are repaid ahead of ordinary rehabilitation claims. Given the large size of Homeplus' priority claims, the extent of consent for the installment repayment plan is expected to be one of the main criteria in assessing whether the rehabilitation plan can be implemented.
According to Homeplus, 9,571 individual and institutional creditors had agreed to the installment repayment of priority claims as of the 27th. The consent rate stood at about 58.1%. Among them, the consent rate for merchandise suppliers was 62.4%, while the rate for employees was 87.2%. Homeplus believes additional consent is needed to pass the feasibility review for its rehabilitation plan.
The key issue is the repayment method. Homeplus has proposed repaying priority claims in full within three years. However, some creditors have raised concerns about fairness compared with trust-secured creditors. In response, Homeplus said the proceeds from the sale of real estate with trust collateral must, under the law, be used first to repay loans owed to trust-secured creditors.
Homeplus said that if insufficient consent from priority creditors leads to the end of rehabilitation proceedings and a shift to bankruptcy, creditor losses could become even greater. It added that repayment rates would likely fall and repayment periods could also be extended if the case moves into bankruptcy.
A Homeplus official said, "All priority claims are repaid in the same way by category, regardless of whether priority creditors consent, so agreeing to the plan does not put those claims at a disadvantage." The official added, "If the rehabilitation plan is not approved because sufficient consent is not obtained, creditors could suffer greater losses, so we ask you to agree to the installment repayment of priority claims."

[email protected] Kim Hyun-ji Reporter