Korea Pizza Hut has again extended the deadline to submit its rehabilitation plan. Industry officials say that, with the Supreme Court's final ruling ordering the return of differential franchise fees increasing the repayment burden, the overall structure for acquisition and financing has become more strained, and in the downturn there appears to be no clear candidate to acquire Korea Pizza Hut.
According to the Seoul Bankruptcy Court on the 19th, Korea Pizza Hut extended the deadline to submit its rehabilitation plan to the 13th of next month. The original date by which it had to submit the plan was on the 16th.
Korea Pizza Hut applied for rehabilitation proceedings in Nov. 2024, citing a dispute with franchise owners over differential franchise fees and accumulated financial burdens. The Seoul Bankruptcy Court then opened rehabilitation proceedings for Korea Pizza Hut in Dec. 2024.
At the time, the final deadline to submit the rehabilitation plan was Mar. 20, 2025, but it was extended once to April of the same year. The key to rehabilitation is whether a merger and acquisition (M&A) can be concluded, premised on new capital inflows and a return to normal operations. However, the process is being delayed as Korea Pizza Hut still has not found a willing buyer.
The industry sees the M&A of Korea Pizza Hut as unlikely to be easy. With the Supreme Court's final ruling to return differential franchise fees adding expense burdens while rehabilitation is underway, the attractiveness of an acquisition has diminished.
Earlier, on the 15th, the Supreme Court finalized a lower court ruling ordering Korea Pizza Hut to return about 21.5 billion won in differential franchise fees unlawfully collected from franchise owners. Differential franchise fees are the margin (profit) the headquarters added when supplying raw and subsidiary materials to franchisees. The Supreme Court determined it constituted unjust enrichment on the grounds that the franchise contract did not clearly state the relevant details.
As a result, from the acquirer's standpoint, the expense to be borne after the acquisition has increased. In addition, Korea Pizza Hut's losses amid the domestic restaurant industry slump are adding to M&A uncertainty. According to the Financial Supervisory Service, Korea Pizza Hut swung to a loss with an operating loss of 300 million won in 2022, followed by an operating loss of 4.5 billion won in 2023 and 2.4 billion won in 2024.
Korea Pizza Hut says it is proceeding normally with procedures related to rehabilitation and sale. After applying to the Seoul Bankruptcy Court for corporate rehabilitation in Nov. 2024, it received a commencement decision in about a month and selected Samil PwC as its sale advisor to carry out the M&A process.