With corporate rehabilitation proceedings terminated, the bankruptcy of Homeplus Co. has effectively entered the final countdown. Homeplus Co. on the 13th declared a temporary shutdown of all 67 stores, including headquarters. The company cited the exhaustion of operating funds and difficulties maintaining and managing facilities. If Homeplus Co. fails to secure at least 200 billion won in operating funds by the appeal deadline on the 20th, it will move into liquidation.
Attention has shifted in two directions. How the bankruptcy will be declared, and where the last remaining prime stores will go. Some Chinese e-commerce firms operating in Korea are also said to be interested in these stores.
◇ Not a general bankruptcy but "connected bankruptcy"
According to related industries, Homeplus Co. is likely to pursue "connected bankruptcy (牽連破産)" rather than general bankruptcy. Connected bankruptcy is a procedure in which, to prevent corporations whose rehabilitation has been halted from being left unattended, the court declares bankruptcy ex officio at the same time rehabilitation is terminated, or upon the corporation's application. Unlike general bankruptcy, where creditors or the company newly file for bankruptcy after rehabilitation ends, connected bankruptcy links rehabilitation and bankruptcy into a single case. Homeplus Co. said, "It has not yet been decided whether to file for bankruptcy directly within this week."
The crux is the priority of public-interest claims. Homeplus Co.'s public-interest claims are estimated at 1 trillion won. A large portion consists of payments to partner suppliers and unpaid wages and severance for employees that arose after the rehabilitation began. This also includes claims for damages by store owners that operate in the Homeplus Co. Mall who could not do business due to the bankruptcy.
In connected bankruptcy, the legal status of public-interest claims accumulated during rehabilitation carries over as is. By contrast, if a separate general bankruptcy process is pursued after termination is finalized when the appeal period passes, creditors must file their claims again, and in that process the order of repayment can become tangled. A representative of one creditor said, "If it goes to general bankruptcy, even items like unpaid wages for employees can get all mixed up, and public-interest creditors could end up being harmed," adding, "To prevent such major confusion, it will likely go to connected bankruptcy." In prior cases involving the bankruptcy of retail companies such as WEMAKEPRICE INC., courts also proceeded with connected bankruptcy to protect public-interest creditors.
◇ The ball is with Meritz… who will buy the prime stores
Sixty-two Homeplus Co. stores are held in a collateral trust by Meritz Financial Group. Three Meritz affiliates in May 2024 lent 1.2166 trillion won to Homeplus Co., placing these stores in trust and securing first-priority beneficiary rights. Assets in collateral trust are outside the disposition process of the bankruptcy estate, allowing the creditor to decide independently when and for how much to sell. Even if the court appoints a bankruptcy trustee after declaring bankruptcy, the 62 stores will be handled through consultations with Meritz. Homeplus Co. estimates this accounts for about 99% of the asset.
In the investment banking (IB) industry, the view is that Meritz will pursue a "selective sale," offloading only high-quality stores. Profitable prime stores would be bundled and sold to a retailer or a major developer, with the remainder disposed of through individual auctions if they do not sell. Rather than a business transfer that carries the burden of employment succession, a purchase and assumption (P&A) structure that selectively acquires only sound assets and liabilities is being discussed as a possibility.
There is also speculation that store sites will be developed into mixed-use complexes, offices, or logistics centers. However, because rezoning and development take years, it is more likely that, rather than Meritz moving directly to quickly recover principal, the buyer that acquires the land will handle development.
◇ E-MART and Lotte Mart to "share the pain"?… Is Ali also a candidate?
Competitors are first being mentioned as acquisition candidates. E-MART and Lotte Mart would take on some stores that do not overlap their trade areas in a "burden-sharing" approach. The two companies are also the biggest beneficiaries of Homeplus Co.'s closures. According to Hana Securities, as 59 Homeplus Co. stores shut down, sales at E-MART and Lotte Mart locations within the affected zones rose by about 10%. It also analyzed that if Homeplus Co. shuts down completely, E-MART could gain 55 billion won and Lotte Mart 20 billion won in additional operating profit annually. That corresponds to 18% and 4% of last year's consolidation operating profit, respectively.
Chinese e-commerce eyeing logistics bases is also being mentioned. For an overseas company to enter the Korean retail market from scratch is costly, and buying an already established store network could be a more rational choice. The most frequently cited name is AliExpress. It was previously floated as a potential bidder for Homeplus Express, and its parent Alibaba's fresh-food chain "Hema Fresh (盒馬鮮生)" in China is cited as a basis because it has a similar structure. At Hema Fresh, stores themselves are urban logistics hubs.
Ali's weakness in fresh food also ties in. In the brand special sale held on the 8th–10th of this month, the top categories by transaction amount were auto accessories, audio equipment, and outdoor gear, with all top-10 items being manufactured goods. It is also a limitation that domestic logistics rely on partners such as CJ Logistics and Hanjin.
However, it is uncertain whether the sale will proceed smoothly. As grocery demand has already shifted to e-commerce, the hypermarket format itself is shrinking. An industry official said, "Amid the ups and downs of the hypermarket industry, it is questionable how much incentive remains to newly enter a market where the No. 1 and No. 2 players are holding firm."