Homeplus Faces Its 'Day of Fate' as Reorganization or Bankruptcy Looms

[Financial News] The creditors' meeting that will determine Homeplus' fate is now just one day away. If the rehabilitation plan is approved, the company could move faster toward normalizing management. If it is rejected, however, the likelihood of Homeplus' rehabilitation proceedings being abolished and the company entering bankruptcy will rise. As resistance from public-interest creditors, including suppliers, continues, the industry is closely watching the vote that will decide Homeplus' future.
According to the retail industry on the 1st, the Seoul Bankruptcy Court will hold a creditors' meeting at 3 p.m. on the 2nd to vote on Homeplus' rehabilitation plan. In corporate rehabilitation proceedings, the meeting is a process in which interested parties, including creditors, secured creditors and shareholders, review the plan and decide whether to approve it. Secured rehabilitation creditors, rehabilitation creditors and shareholders will each vote by group.
The meeting is expected to be the biggest turning point in Homeplus' rehabilitation process. If the plan is approved, the chances of court authorization will increase. If it is rejected, the rehabilitation proceedings could be abolished. The court would then review Homeplus' prospects for recovery and other factors before deciding whether to declare bankruptcy.
The biggest variable is whether creditors agree. In particular, the approval rate among public-interest creditors is seen as a key indicator of whether the rehabilitation plan can be carried out, but the rate secured so far remains relatively low. Industry observers say that if the approval rate stays low, the court may judge that the plan is unlikely to be implemented because of future funding burdens and other concerns.
Homeplus is currently seeking agreement from public-interest creditors on installment repayment of their claims. As of the 28th of last month, 9,571 individual and institutional creditors had agreed to the installment plan, bringing the overall approval rate to 58.1%. The court is said to have asked Homeplus to raise the approval rate for installment repayment among public-interest creditors to around 80% by the end of the day.
However, suppliers who are public-interest creditors continue to push back. Under Homeplus' second revised rehabilitation plan, wage claims and secured trust claims related to Meritz Financial Group would be repaid relatively soon, while payments for goods supplied by vendors would be deferred for a long period.
If the rehabilitation plan is rejected amid these conflicting interests among creditors, Homeplus' rehabilitation process will face a major setback. The final deadline for approval of Homeplus' rehabilitation plan has already been extended to the legal maximum, and it is only two days away on the 4th. If the proceedings are abolished and the company moves toward bankruptcy, ripple effects will be unavoidable for Homeplus employees, suppliers, tenant businesses and even local commercial districts.
An industry official said, "If Homeplus ends up in bankruptcy or liquidation, it will have a significant impact not only on partner companies but also on the local economy and employment." The official added, "In the large discount store market, the duopoly between E-Mart and FRESH 365 is likely to become even stronger."
If the rehabilitation plan is approved and receives court authorization, Homeplus is expected to accelerate efforts to normalize management. However, it will still need to secure funds to repay creditors, so store sales and business restructuring appear unavoidable.
A Homeplus official said, "Once the rehabilitation plan is approved, we will immediately begin selling the 19 stores we own out of the 37 stores slated for closure, and we plan to complete the sales by February 2028." The official added, "Because the proceeds from the sale of owned stores are tied to real estate trust collateral, they will be used to repay trust-secured creditors. We expect to be able to repay the full amount through the sale proceeds."
[email protected] Jang Yu-ha Kim Hyeon-ji Reporter