According to industry sources on Thursday, the retailer sent a a notice to the Korea Mart Labor Union's Homeplus branch and a separate general union that it had decided to close the stores, which had been suspended since May 10 due to their low contribution to earnings.
The 37 outlets are among 104 hypermarkets operated by Homeplus, which is undergoing court-led rehabilitation after years of mounting debt under private equity owner MBK Partners.
Homeplus said it would apply an asset-securitisation support scheme to affected staff and offer voluntary redundancy to employees at managerial level and above, excluding those with less than six months until retirement.
But the company cautioned that the payouts hinge on its survival.
"The support scheme and voluntary redundancy can only be applied if creditors agree to emergency operating loans and an extension of the rehabilitation process," Homeplus said in the notice.
According to the union, about 3,500 people work at the 37 stores, of whom about 1,500 managerial staff are eligible for voluntary redundancy. The unions have warned the closures could trigger a domino effect across the remaining 67 outlets.
Homeplus filed in for court receivership in March last year, becoming the first of South Korea's big three hypermarket operators to enter rehabilitation.
The crisis traces back to MBK's 2015 leveraged buyout, which saddled the chain with heavy lease and rental burdens that critics say hollowed out its finances.
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