Homeplus Co., standing at a crossroads between rehabilitation and liquidation, has for now put out an urgent fire with the court's decision to extend its corporate rehabilitation (court receivership) process. Although it has caught its breath for the moment, some say that if it fails to accelerate business restructuring, including the sale of the Homeplus Express supermarket chain (SSM), and normalize management over the next two months, it could face a bankruptcy crisis.
According to the industry on the 5th, the emergency committee for victims of Homeplus Co.'s asset-backed commercial paper held a press conference the day before in front of the Seoul Bankruptcy Court and expressed opposition to extending the rehabilitation deadline. The committee said, "An extension may be nothing more than life support, not the normalization of corporations."
Earlier, on the 3rd, the Seoul Bankruptcy Court accepted Homeplus Co.'s request filed on the 2nd to extend the deadline for approval of its rehabilitation plan. The approval deadline, originally set for the previous day, was extended by two months to May 4. It comes one year after Homeplus Co. applied for rehabilitation in Mar. last year.
With this decision, Homeplus Co. has escaped an immediate liquidation crisis and gained two months. In a statement, Homeplus Co. said, "We will complete all structural innovation plans without a hitch and achieve normalization," adding, "We will wrap up the remaining items, including the sale of Homeplus Express, and solidify the foundation for normalization."
The court appears to have considered factors such as the majority shareholder MBK Partners injecting 100 billion won to resolve debt including employee wages in arrears and the need to check the progress of the Homeplus Express sale. However, since the approval period was not extended to the maximum of six months, management normalization is urgent.
Challenges such as resolving Homeplus Co.'s cash crunch remain piled up. Although the "structural innovation-type rehabilitation plan" that Homeplus Co. submitted to the court in Dec. last year included securing a total of 300 billion won in debtor-in-possession (DIP) emergency operating funds, the only amount secured so far is the 100 billion won MBK is injecting this time. Meritz Financial Group, Homeplus Co.'s largest creditor, and the public institution Korea Development Bank (KDB) have drawn a line against providing funds.
Regarding the separate sale of Homeplus Express, five to six companies are reportedly showing interest in an acquisition. Homeplus Co. said last month that "tangible results will come soon," but it remains uncertain whether this will lead to the submission of a letter of intent (LOI) and a final contract.
Homeplus Co. expects that retailers aiming to strengthen quick commerce (delivery completed within 1–2 hours) will be interested in Express. However, so far, no one other than private equity funds is believed to be interested in an acquisition. The labor union's opposition to a separate sale of Express is also a variable.
The issue of replacing the rehabilitation administrators, a role held by MBK Partners Vice Chairman Kim Kwang-il and Homeplus Co. co-CEO Cho Ju-yeon, is also seen as a variable. The union and political circles have called for bringing in Union Asset Management Company (UAMCO), a quasi-public institution, as a third-party administrator instead of MBK Partners.
The union said, "The decision on UAMCO's participation is not a simple corporations sale issue but a matter of livelihood for the workers and ordinary people at Homeplus Co.," adding, "We hope that credible UAMCO will step in as administrator to normalize the transaction structure, including deliveries and payment of proceeds, and enable a swift recovery." However, UAMCO has not offered a specific position so far.