Homeplus has temporarily averted bankruptcy following the approval of its rehabilitation plan by the Seoul Bankruptcy Court, but significant challenges remain. The company must repay over 500 billion won in outstanding payments to suppliers while securing additional operating funds and improving the profitability of reopened stores. While the rehabilitation plan offers a 'chance for survival,' the company must now demonstrate its viability through actual business performance. This is why industry experts are stating that 'the real test begins now.'
On September 2, the Seoul Bankruptcy Court immediately approved Homeplus's rehabilitation plan after it was passed at a creditors' meeting. The plan received unanimous support from 100% of secured creditors, 75.90% of rehabilitation creditors, and 100% of shareholders. The meeting, which began at 3 p.m., concluded with the approval in about two hours, contrary to initial expectations. The court's approval does not mean Homeplus has successfully rehabilitated; rather, it signifies that the company has secured an opportunity to normalize operations by repaying debts as outlined in the plan. The court indicated that it would conclude the rehabilitation process once repayments commence as planned. Conversely, failure to implement the plan could lead to a 'revocation of approval' and an automatic bankruptcy declaration.
The most urgent task for Homeplus's recovery is to restore relationships with public creditors, including suppliers. Kim Kwang-il, co-CEO of Homeplus and vice chairman of MBK Partners, stated at the creditors' meeting that the percentage of public creditors agreeing to the repayment plan is 66.3%. Public creditors include suppliers, employees' wages and severance pay, rent, taxes, and social insurance contributions. Although they do not have voting rights at the meeting, they must be repaid before general rehabilitation creditors. If creditors who do not agree to the repayment demand immediate payment, it could strain Homeplus's cash flow.
The Seoul Bankruptcy Court has reportedly required Homeplus to secure a public creditor agreement rate of about 80%, making it essential to obtain additional consents. If the company fails to reliably repay the over 500 billion won in outstanding supplier payments, the supply of goods from partner companies may again be disrupted.
Securing additional funds is also necessary. Last month, Homeplus obtained 200 billion won in emergency operating funds (DIP) from Meritz Financial Group, backed by a personal guarantee from MBK Partners Chairman Kim Byung-joo, allowing it to resume operations at 67 key stores. However, since DIP is a short-term emergency fund, additional resources are needed to support long-term repayments.
Asset sales will also be pursued. Homeplus plans to sell 19 self-owned stores among the 37 locations designated for closure to generate funds for debt repayment. The company is also working to reduce unprofitable stores and lower fixed costs such as rent and labor to enhance the profitability of remaining locations. There is also potential for future mergers and acquisitions involving Homeplus itself.
Ultimately, the success of the rehabilitation will depend on the core business. Even if key stores reopen, Homeplus must restore its product assortment and customer base to stabilize sales and profitability for long-term debt repayment. Competing not only with large discount stores but also with e-commerce platforms like Coupang, relying solely on cost-cutting measures will not ensure sustainable recovery.
An industry insider remarked, "Whether Homeplus can translate the time secured from the court and creditors into improved performance and restored trust will determine its future survival."
* This article has been translated by AI.
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