Homeplus Gets Breathing Room as Court Approves Rehabilitation Plan (Comprehensive)

75.9% of Rehabilitation Creditors Approve, Exceeding Legal Requirement
Additional Loans Planned in 2030 and 2037 to Repay Remaining Debt

Homeplus, currently undergoing corporate rehabilitation proceedings, has received court approval for its rehabilitation plan with the consent of its creditors. This comes approximately a year and six months after entering the rehabilitation process in March of the previous year. While the immediate risk of bankruptcy has been avoided, challenges remain, including repaying public interest claims, selling stores, and normalizing business operations.

On September 2, the fourth Division for Rehabilitation at the Seoul Bankruptcy Court (Presiding Judge Jung Junyoung) held a creditors' meeting to review and vote on the Homeplus rehabilitation plan, and approved the plan. The court stated, “It is recognized that the plan meets the requirements for rehabilitation plan approval as stipulated by the Debtor Rehabilitation and Bankruptcy Act.” The approval took effect immediately upon pronouncement.

75% of Creditors Approve... Sale of Company-Owned Stores for Repayment

The Homeplus rehabilitation plan was approved in all committees, surpassing the approval thresholds. Both the secured creditors committee and the shareholders committee voted 100% in favor. In the rehabilitation creditors committee, approximately 1.8836 trillion won out of a total 2.4816 trillion won voting rights were in favor, recording a 75.9% approval rate. Approval requirements are at least 75% in the secured creditors committee, at least 66.7% in the rehabilitation creditors committee, and at least 50% in the shareholders committee. The court also took into consideration that more than two-thirds of public interest creditors agreed to installment repayments when making its approval decision.

Homeplus plans to prioritize the sale of 19 company-owned stores (out of 37 confirmed for closure) by February 2028. The proceeds from these sales will be first used to repay the 1.3 trillion won senior secured trust bond held by Meritz Financial Group. Afterward, Homeplus plans to use its 38 company-owned, continuing-operation stores as collateral to obtain an additional loan in 2030, and in 2037, to either expand or roll over the loan to secure the resources for repayment of the remaining debt. The appraised value of these 38 company-owned stores is estimated to be approximately 2.8 trillion won. If asset sales and normalization of business proceed as planned, the company also intends to once again pursue a merger and acquisition (M&A) of Homeplus itself.

Secured trust bonds and claims with senior and subordinate liens on stores will be repaid preferentially using the proceeds from the sale of collateral assets and other funds. Depending on the sale timing of the stores, the repayment period for some secured claims may be extended by up to three years. Unsecured claims such as credit card payments, trade payables, reimbursement obligations, and damages claims will see their principal and interest accrued prior to the commencement of rehabilitation proceedings repaid over years five through ten. Interest accrued after the commencement of proceedings will be waived. All existing shares will be canceled without compensation.

The court-appointed examiner, Samil PwC, concluded that the amount to be repaid under the rehabilitation plan would exceed what creditors would receive in the event of liquidation, thereby satisfying the liquidation value preservation principle. Taking into account projected cash generation through business operations, sale of company-owned stores, and new financing plans, the examiner regarded implementation of the rehabilitation plan as feasible.

Kwangil Kim, the legal administrator of Homeplus, stated, “The first priority is to close deficit stores and reduce fixed costs to secure profitability and enable debt repayment.” He added, “We have reduced rental expenses by more than 20 billion won per month and labor costs by more than 26 billion won per month.”

Kim Kwangil, Vice Chairman of MBK, is speaking at the MBK Partners-Meritz management meeting for Homeplus revival held at the National Assembly Members' Office Building on July 9, 2026. Photo by Hyunmin Kim

Over 500 Billion Won in Public Interest Claims and Business Normalization Remain As Challenges

There are many hurdles left before the rehabilitation plan can actually be implemented. First, Homeplus must repay over 500 billion won in public interest claims, including outstanding payments to suppliers. Public interest claims are not subject to a vote on the rehabilitation plan, but must be paid in preference to ordinary rehabilitation claims. If public interest creditors who do not agree to installment repayments demand lump-sum payment, Homeplus could again face liquidity strain.

Restoring business competitiveness is also crucial. According to Homeplus, from July 13 to July 30, when 67 stores nationwide reopened, sales reached 114.6 billion won, a 57% increase compared to the same period before business suspension. Customer numbers also rose by 38%. However, the large discount store market remains in a prolonged slump, and both Homeplus’s credit rating and business capabilities have weakened during the rehabilitation process. Some partners have yet to resume supplying goods, meaning product variety has not fully recovered, and issues with store management due to workforce reductions also persist. Uncertainties remain as to whether store sales will proceed as planned. There are concerns, as many of the 19 stores designated for sale are located in regional areas, making it difficult to find buyers.

The Homeplus rehabilitation proceedings have already experienced setbacks, including a court decision to terminate the process. On July 3, the court initially decided to terminate the rehabilitation due to Homeplus’s failure to raise at least 200 billion won in minimum operating funds. When Homeplus submitted an emergency operating fund loan commitment for 200 billion won from Meritz Financial Group and immediately appealed, the court reversed its decision and resumed the rehabilitation process on July 21. Homeplus stated, “We will faithfully implement the court-approved rehabilitation plan to ensure that the debt repayment plan proceeds without disruption.”

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