Court Cancels Homeplus Rehabilitation Termination, Extends Plan Approval Deadline

Approval for Rehabilitation Plan Required by September 4

The court has extended the rehabilitation procedure for Homeplus after the company secured a funding plan.

Lights are on at the customer service center of Homeplus Gangseo Branch in Gangseo-gu, Seoul, on the 14th, the second day since Homeplus stopped operations due to lack of funds to cover store maintenance costs. Photo by Yonhap News

The Rehabilitation Division 4 of the Seoul Bankruptcy Court (Chief Judge Jung Joon-young) announced on the 21st that it had overturned its previous decision to terminate Homeplus’s rehabilitation proceedings and has issued a decision to extend the deadline for approval of the rehabilitation plan.

The court stated, "The initial termination decision was based on the absence of operating funds, making it impossible to execute the rehabilitation plan. However, as the operating funds have now been secured, there was a legitimate reason to grant the immediate appeal," adding that "the existing rehabilitation proceedings will resume."

However, even though the rehabilitation procedure has resumed, the timeline remains tight. Under the Debtor Rehabilitation and Bankruptcy Act, a rehabilitation plan must be confirmed within a maximum of 18 months from the date of filing the rehabilitation application. Since Homeplus filed for rehabilitation on March 4th of last year, it must obtain approval for its rehabilitation plan by September 4th this year.

On July 3rd, the Seoul Bankruptcy Court decided to terminate the rehabilitation procedure for Homeplus, stating that the company failed to secure the minimum required funds of 200 billion won needed for the rehabilitation process.

Subsequently, Homeplus's largest group of creditors—including Meritz Fire & Marine Insurance, Meritz Securities, and Meritz Capital, collectively known as Meritz Financial Group—convened a board meeting on the 16th and approved an agenda to provide emergency operating funds (DIP financing). In practice, this funding will only be executed after the court formally authorizes the restart of rehabilitation proceedings, the necessary contracts for DIP financing are executed, and major creditors agree to the rehabilitation plan. Responding to these circumstances, Homeplus filed an immediate appeal by supplementing its funding plan.

Homeplus must also obtain the consent of its major creditors before it can submit its rehabilitation plan. Considering that it usually takes several months to amend the plan and coordinate opinions with creditors, the remaining time is deemed to be insufficient.

Even after the court approves the rehabilitation plan, there is no guarantee of stability. The court will continue to monitor the progress of the plan’s implementation, and if there are any setbacks, the rehabilitation proceedings could be terminated or may even result in bankruptcy.

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