This article was displayed on the ChosunBiz MoneyMove (MM) site at 4:59 p.m. on Jan. 8, 2026.
Prosecutors currently investigating the "Homeplus Co. incident" have taken direct aim at MBK Partners Chairman Kim Byung-ju. They sought arrest warrants for four people, including Kim.
Within the industry, there had been mixed views on whether prosecutors could move to secure custody of Chairman Kim. That is because some said it would not be easy for prosecutors to prove direct involvement and intent. MBK Partners has argued that while Kim was briefed on Homeplus Co.'s situation, he did not directly intervene in its operations.
Kim and others are scheduled to undergo a warrant review on the 13th. If arrest warrants are issued for them, Homeplus Co.'s ongoing rehabilitation proceedings are expected to face the biggest headwind since initiation.
◇ Decision on arrests on the 13th... financial sanctions if fraudulent unfair trading is recognized
According to investment banking (IB) industry officials and legal sources on the 8th, the Seoul Central District Prosecutors' Office's Anti-Corruption Investigation Division 3 (acting chief prosecutor Kim Bong-jin) sought arrest warrants the previous day for four people—MBK Partners Chairman Kim Byung-ju, Vice Chairman Kim Kwang-il (Homeplus Co. co-CEO), Executive Vice President Kim Jung-hwan, and Managing Director Lee Sung-jin—on charges including fraud under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes and violations of the Financial Investment Services and Capital Markets Act (fraudulent unfair trading). The warrant review will be held at 1:30 p.m. on the 13th at the Seoul Central District Court, presided over by warrant-judge-in-charge Chief Judge Park Jung-ho.
A lawyer who previously served as a Director General-level prosecutor said, "Fraud under the Criminal Act and fraudulent unfair trading under the Financial Investment Services and Capital Markets Act are practically similar in their constituent elements," adding, "However, if it is recognized as fraudulent unfair trading, financial sanctions such as a penalty surcharge can be much heavier."
Prosecutors believe Kim, Vice Chairman Kim and others anticipated a downgrade of Homeplus Co.'s credit rating but issued 82 billion won worth of asset-backed short-term bonds (ABSTB) and then abruptly applied for corporate rehabilitation, causing losses to investors.
Korea Ratings downgraded Homeplus Co.'s credit rating from "A3" to "A3-" on Feb. 28 last year, and four days later, on Mar. 4, Homeplus Co. applied for corporate rehabilitation with the Seoul Bankruptcy Court. As a result, Homeplus Co. halted debt repayment under court protection, and creditors who newly invested immediately suffered losses. Prosecutors concluded that this sequence of events was not coincidental but a crime that meticulously timed the intervals.
What the industry is watching most closely is whether the charges can reach Chairman Kim. Prosecutors suspect that MBK Partners' executives, including Kim, received direct reports of deficits from late 2023 and that by mid-February last year at the latest, they likely recognized the possibility of a credit downgrade.
◇ Whether there was direct involvement in decision-making is key... did prosecutors secure evidence
Prosecutors are said to be focusing on proving suspicions that Kim directly participated in decisions such as applying for corporate rehabilitation. Given the structural characteristics of private equity funds—where legal entities are divided into the manager (MBK Partners), the PEF (the fund that invested in Homeplus Co.), and the portfolio company (Homeplus Co.)—Kim could use as a shield the argument that "Homeplus Co. was the issuer and the manager exercised only shareholder governance."
What prosecutors are examining is not Kim's formal title but whether there was substantive control and instruction. A lawyer who previously served as a Director General-level prosecutor said, "Prosecutors appear to have collected evidence through searches and seizures and account tracing," adding, "If emails, messengers or other evidence support that Kim received advance reports on decisions and intervened in decision-making, Kim's claim that 'I did not intervene in the company's operations' could lose force."
However, legal sources say it will not be easy for prosecutors to prove whether Kim "intervened." Kim is known to have received reports on the financial status and performance of all portfolio companies, not just Homeplus Co., in Monday meetings every week, but MBK Partners says these reports were closer to "sharing." In other words, while Kim was briefed on Homeplus Co.'s financial situation, he did not instruct key decisions such as bond issuance and corporate rehabilitation.
It is understood that even in the arrest warrant request, there was no specific citation of "evidence" such as text messages or emails.
Whether Kim and others might "flee or destroy evidence" is also a key factor in deciding on arrests. Generally, courts decide on issuing warrants by considering not only whether the charges are substantiated but also the risk of flight and evidence destruction. Prosecutors are expected to argue that there is a risk of flight and evidence destruction on the grounds that Kim holds U.S. citizenship and has a history of staying overseas for extended periods.
However, some argue that the right to defense should be ensured, given that Kim has already been under a travel ban and under investigation since last year. When Kim entered the country in May last year, prosecutors conducted a compulsory investigation by seizing his mobile phone at the airport.
◇ Prosecutors must prove "intent" to defraud... not guilty in the Woongjin case
If prosecutors indict Kim and others and send the case to trial, they are expected to focus on proving intent to defraud. This applies not only to Chairman Kim but also to other executives such as Vice Chairman Kim.
In short-term debt and securitized issuance cases, courts generally focus on whether "material information for investment decisions was concealed or distorted." In other words, it must connect whether the risk of a downgrade or the possibility of rehabilitation is evaluated as a "material fact," how that fact was expressed during issuance and sale, and whether investors decided to buy because of it.
Vice Chairman Kim has maintained that "we did not know in advance about the short-term debt credit rating downgrade, and the decision to apply for rehabilitation was made only after the downgrade," but if prosecutors can prove that MBK Partners decided on rehabilitation before the bond issuance, contrary to that claim, they may gain the upper hand.
In the past Woongjin Holdings commercial paper (CP) issuance case, the court also focused on whether there was intent in issuing the CP and ultimately rendered a not-guilty verdict.
Chairman Yoon Suk-geum was indicted without detention on charges including issuing 119.8 billion won in CP between late July and early August 2012 ahead of Woongjin Holdings' credit downgrade and application for corporate rehabilitation. At the time, prosecutors argued, similarly to the current Homeplus Co. case, that "the Woongjin group hid management difficulties and a liquidity crisis and issued CP to deceive investors."
However, the court found that of the 119.8 billion won, for the 100 billion won issued before the rehabilitation decision, "Chairman Yoon sought to secure liquidity through the sale of Coway, and had the sale proceeded smoothly, the debt including the CP could have been resolved," ruling that there was no intent to deceive investors. For the 19.8 billion won issued after the rehabilitation decision, the court ruled not guilty, saying it was "issued to extend the maturity of CP already issued" and that, given the decision-making structure, working-level staff issued it without Chairman Yoon's involvement.