MBK: "Meritz to Earn Hundreds of Billions in Interest from Homeplus" vs Meritz: "Default Interest Is a Risk"

"20% Annual Loan Rate... 40% Return Over Two Years"
Meritz: "Amount Based on Worst-Case Scenario... Actually a Risk"

There is an analysis suggesting that Meritz Financial Group could not only recover its entire principal but also earn more than 500 billion won in profit by collecting 20% annual default interest if Homeplus is liquidated. Some argue that, from Meritz Financial’s perspective, liquidation is more advantageous than corporate rehabilitation.

Homeplus and MBK Partners released an explanatory statement on the 23rd detailing this situation. Previously, Meritz Financial lent 1.3 trillion won to Homeplus, secured by real estate collateral valued at 1.56 trillion won. According to Homeplus and MBK, the collateral was established through a real estate trust. This structure allows Meritz Financial to recover the principal and interest through private sales of the real estate, without following the court auction procedures required during liquidation or bankruptcy.

Yonhap News Agency

If the principal and interest are recovered through a private auction, the interest rate agreed upon in the loan contract applies. For the Homeplus loan claims, since the rehabilitation application was filed on March 4, 2023, the statutory maximum interest rate of 20% per annum is applied. Although the contractual default interest rate is 26% per annum in the event of liquidation, only 20% is applied, as this is the statutory maximum.

Based on these calculations, the default interest accruing from the time of the rehabilitation application until the deadline for approval of the rehabilitation plan, which is the 3rd of next month, amounts to approximately 338.4 billion won. Homeplus and MBK explain that if Homeplus enters liquidation or bankruptcy, Meritz Financial could collect more than 500 billion won in interest. In this scenario, over the two years and six months since the loan was executed in May 2024, Meritz would earn more than 40% of the principal as profit.

Homeplus and MBK stated, "Under the current structure, Meritz stands to gain greater economic benefits from liquidation than from rehabilitation, whereas employees, partner companies, suppliers, small business owners, and general creditors would face the risk of losses. While rehabilitation offers a path for all stakeholders to survive together, liquidation could result in Meritz Financial, as the main creditor, reaping an additional profit exceeding 500 billion won, to the detriment of others."

Meritz: "Only a conceptual number assuming the worst-case scenario... For us, it is a risk"

In response, Meritz Financial countered that these are merely conceptual figures based on a worst-case scenario. They explained that although default interest has accrued on the books in accordance with the loan contract due to non-payment of interest following the rehabilitation filing, actually collecting such default interest is an entirely different matter. Meritz Financial also added that since Homeplus filed for rehabilitation in March last year, they have not requested repayment of the principal or interest from MBK.

A Meritz Financial representative explained, "For a financial institution, the accrual of default interest indicates an increased risk of non-recovery of the loan, and there is no financial institution whose goal is to maximize profits through default interest. The occurrence of default interest simply means that the risk of non-recovery is increasing."

This content was produced with the assistance of AI translation services.