'Judgment Day' Stakeholders Meeting on September 2... 500 Billion Won in Supplier Payments to Decide Homeplus's Fate

Trading Creditors: "Repayment of Public Interest Claims Is Too Slow"

Homeplus: "100% Repayment in Three Years... Losses Would Be Greater in the Event of Bankruptcy"

Consent Rate at 58.1%... First Hurdle Is Stakeholders' Meeting on September 2

As the stakeholders' meeting that will determine whether to approve Homeplus's rehabilitation plan is scheduled for September 2, unpaid supply payments exceeding 500 billion won have emerged as a core issue in the company's recovery. Homeplus is appealing for consent by pledging to fully repay all public interest claims within three years, but there are concerns about the plan's feasibility, as actual repayment resources depend on future normalization of operations, asset sales, and additional borrowing.

According to Homeplus and the retail industry on August 29, a total of 9,571 individual and institutional holders of public interest claims had agreed to installment repayment by August 27. The overall consent rate stands at 58.1%. Among product suppliers, 62.4% gave their consent, along with 87.2% of employees. The Seoul Bankruptcy Court has requested Homeplus to obtain and submit the consent of public interest creditors to installment repayment, in order to assess the executability of the rehabilitation plan.

Yonhap News Agency

Homeplus Suppliers: "Cannot Accept Deferral Terms for Outstanding Supply Payments"

The greatest variable lies with the suppliers. The Homeplus Trading Public Interest Creditors Council submitted its second opinion letter to the Seoul Bankruptcy Court on August 24, stating it finds it difficult to accept the deferral plan for outstanding supply payments.

The main point of contention is the repayment speed for each type of claim. According to the rehabilitation plan, trading public interest claims related to unpaid supply payments total 503.2 billion won, but only about 2.5 billion won, accounting for 0.5% of this amount, is scheduled to be repaid by 2028. In contrast, claims for wages and severance pay, totaling 63.3 billion won, will be 69% repaid by February 2027 and fully repaid by February 2028. Most of the roughly 1.3 trillion won in senior trust collateralized claims will also be processed by February 2028.

The council agrees that wage and collateralized claims should be given priority protection, but argues that supply payments, as they also qualify as public interest claims, should be afforded fairness in the repayment process. In particular, the council points out that small and medium-sized suppliers with limited cash reserves could face critical cash flow shortages and a chain reaction of management crises if repayment is delayed for years.

A representative from the council stated, "Public interest claims held by small and medium-sized suppliers, many of whom are facing the risk of cascading bankruptcies, must also be repaid in a timely manner," and added, "We cannot accept a plan under which only 0.5% is repaid by 2028."

Homeplus counters that it is not appropriate to simply compare collateralized and trading public interest claims. The company argues that proceeds from the sale of real estate with trust collateral must be used first to repay secured loans, making it impossible for Homeplus to arbitrarily use those funds to repay suppliers. While general rehabilitation claims are repaid over a period of six to ten years, Homeplus also emphasizes that it aims to achieve 100% repayment of public interest claims such as supply payments within three years.

Repayment Depends on Successful Phased Execution of Homeplus Rehabilitation Plan

The problem is that there are no secured funds currently available to make full repayment within three years. The feasibility of Homeplus's restructuring plan hinges on the successive success of asset sales, operational normalization, and large-scale additional borrowing based on these.

Homeplus plans to sell 19 of its company-owned locations among the 37 stores closed in July by February 2028 and use the proceeds to fully repay Meritz Financial Group's trust collateralized claims. After that, the company will use 38 additional company-owned outlets with collateral released as security to raise new loans, which would serve as repayment sources for public interest and other claims. The total appraised value of these 38 stores is about 2.8 trillion won, and the necessary additional collateralized borrowing needed by 2030 is said to reach roughly 600 billion won. The plan also includes expanding collateralized loans to around 900 billion won by 2037 to settle remaining general rehabilitation claims.

Ultimately, repayment of creditors is only possible if all goes as planned: store sales, normalization of business, maintaining collateral value, and securing additional loans from financial institutions. Any delays in the sale of the 19 stores or sales at lower-than-expected prices could disrupt the release of existing collateral, and it will also be necessary for financial institutions to extend loans of several hundred billion won using the 38 outlets as collateral. The volume and terms of future borrowings may also vary depending on changes in interest rates, property values, and Homeplus's operating performance.

Repayment Becomes Uncertain if Performance Worsens

Homeplus's operating performance, which must underpin large new borrowings, is also based on optimistic company projections. The company aims to restore operations with an emergency 200 billion won DIP loan and achieve annual sales of 4.3 trillion won and operating profit of 162.8 billion won by 2030. However, no clear alternative repayment plan has been provided if performance falls short of targets or if product supply is not normalized.

Recent sales rebounds also require further validation of their sustainability. After resuming operations at 67 branches on August 13, Homeplus achieved sales of 43.7 billion won over five days. This represents a 191% increase compared to right before operations were suspended, and average daily sales surged from 3 billion won to 8.7 billion won. However, it is reported that recent sales have slightly declined as the initial reopening and promotional effects have faded and as some product supply remains restricted due to outstanding supply payment issues.

In particular, Homeplus's rehabilitation plan faces a dilemma because supplier cooperation and repayment of supply payments are interdependent. Suppliers must continue providing goods while waiting to recover receivables in order for Homeplus to restore sales, which in turn enables asset sales and additional borrowing so that suppliers can eventually be repaid. Conversely, a reduction in supply could lead to weaker product selection, customer attrition, sales decline, and ultimately disrupt access to funding, destabilizing the entire rehabilitation plan.

The Chuseok holiday shopping season will be the first major test of whether operations have truly normalized. If Homeplus wants to pursue M&A of remaining business divisions following plan approval, it will also need to prove to prospective buyers and financial institutions that the recent sales rebound is not merely a temporary "grand opening effect," but the result of sustainable business fundamentals.

The first inflection point will be the stakeholders' meeting on September 2, with the court's deadline for plan approval set at September 4. However, even after approval, the sequence of normalizing product supply, restoring sales, selling 19 stores, resolving existing collateral, securing new funding with 38 stores as collateral, and pursuing M&A must all be executed successfully.

An industry representative commented, "The importance of the 500-billion-won trading public interest claims lies in the fact that suppliers are not only creditors but also the very source of Homeplus's revenues," and added, "It is important to explain not just that the claims can be repaid if the plan proceeds as expected, but also to show how repayment will be handled if store sales, business normalization, or additional borrowings do not proceed as planned."

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