Homeplus Faces Survival Crisis Over 200 Billion Won... Meritz Rejects 170 Billion Won Funding Proposal

National Assembly Proposes Using Proceeds from Sale of Two Stores for Emergency Funds
Meritz Rejects, Insisting "Proceeds Must Go Toward Debt Recovery"
Industry Warns "Not Easy to Accept...Potential for Breach of Duty"

As the dispute continues over securing 200 billion won in urgent operating funds—the biggest obstacle to the recovery of Homeplus—it was reported on July 9 that Meritz Financial Group has effectively rejected the National Assembly's proposal to use proceeds from the sale of closed stores as operating funds. Meritz maintains that, since these stores are collateral, the proceeds from their sale must be used to recover outstanding claims.

The Seoul Bankruptcy Court decided on July 3 to terminate the rehabilitation procedure, stating that there was no proof of plans to raise at least 200 billion won in external funds. Following this, the largest shareholder, MBK Partners, and the largest creditor, Meritz, have continued to argue over who should be responsible for securing funds.

Kim Namgeun, a lawmaker from the Democratic Party of Korea, met with reporters after a Homeplus-related meeting at the National Assembly on this day and stated, "Among the 37 stores scheduled for closure, three stores that can be sold would yield about 230 billion won in total, and of this, about 170 billion won comes from two stores for which sales contracts have already been signed." Kim explained, "We requested that Meritz allow a portion of these proceeds to be used as urgent operating funds for Homeplus."

Of the 37 stores slated for closure, 19 are owned by Homeplus itself. The National Assembly believes that even the proceeds from the two stores with signed contracts could provide the necessary breathing room for operating funds.

It has been reported that Meritz has expressed strong reservations about this request and has effectively rejected it. Meritz is said to have maintained the stance that they would only agree if the full amount from any future sales was used for recovering claims.

Kim stated, "Since urgent operating funds are legally granted the highest repayment priority, they should be protected from Meritz's perspective as well. I explained this point, but Meritz maintained an unreasonable position, insisting on taking all the proceeds."

Counterarguments to the National Assembly’s ‘highest repayment priority’ logic... Industry says ‘collateral rights come first’

On the 9th, a meeting between MBK Partners-Meritz management was held at the National Assembly Members' Office Building to discuss the revival of Homeplus.

The National Assembly’s perspective—that 'when assets are sold, there should be money available to use'—and the creditors’ logic—that 'there is no reason to give up legitimate collateral rights'—are directly at odds, and the gap between the two sides appears difficult to close.

In cases like this, where the stores to be sold are collateral for Meritz, the general principle is that the proceeds from their sale go first to the collateral holder. The 'highest repayment priority for urgent operating funds' cited by the National Assembly refers to the order of repayment from a debtor’s general assets, and industry experts say it is difficult to apply this concept directly to specific collateral sale proceeds.

The timing is also a variable, as the termination of the rehabilitation procedure has already been decided. An industry source explained, "'Highest repayment priority for urgent operating funds' applies only while rehabilitation procedures are underway. If the procedure is terminated and bankruptcy proceedings begin, the entire framework for prioritizing creditor claims could change." This means that whether the National Assembly’s logic of 'priority use of operating funds' can be applied in the current situation would require separate legal review.

Kim Kwangil, Vice Chairman of MBK (from the left), Kim Junghyun, CEO of Meritz Fire & Marine Insurance, and Cho Jooyeon, CEO of Homeplus, are attending the MBK Partners-Meritz management meeting for Homeplus recovery held on the 9th at the National Assembly Members' Office Building.

Meritz also has its own grounds for insisting on 'full recovery.' Exercising collateral rights is a legal right based on contract and law, and for a financial institution, releasing collateral to provide uncertain operating funds to a company now likely headed for liquidation—after rehabilitation procedures have been terminated—could expose its management to accusations of breach of fiduciary duty. As a financial institution managing the assets of shareholders and customers, Meritz argues that it cannot exchange definite claim recovery for uncertain future recovery.

Meanwhile, the deadline for an immediate appeal against the court’s decision to terminate the rehabilitation procedure is July 20. If an appeal is filed within this period and Homeplus can provide proof of a plan to raise 200 billion won in operating funds, the court may reconsider its decision. However, if there is no appeal or the court does not accept it, Homeplus will have to proceed with bankruptcy procedures.

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