Amid continued confusion over whether to process Homeplus Co.'s rehabilitation plan as it undergoes corporate rehabilitation proceedings, the rehabilitation court said the "revised rehabilitation plan has not yet been submitted." The court also said that because the deadline for approval of the rehabilitation plan has been extended to July 3, the revision should already have been filed.
On the afternoon of the 30th, the rehabilitation court issued a statement titled "Clarification on confusion related to the Homeplus case," saying, "As of 5:30 p.m. on the 30th, the revised Homeplus rehabilitation plan had not been submitted." The court said, "The deadline for approval of the rehabilitation plan is currently extended to July 3," adding, "Although no separate deadline was set for submitting a revision, considering the above approval deadline, it should have been submitted earlier."
The court said it has also completed the process of seeking opinions on excluding the rehabilitation plan and terminating the rehabilitation proceedings. The targets for the opinion inquiry were the creditors' council, the labor union, and shareholders, while the debtor, Homeplus Co., was not among those surveyed. The response deadline was 5 p.m. that day, and all those surveyed replied within the deadline. Regarding the contents of the replies, the court said, "It is difficult to disclose them to anyone other than interested parties."
Although talk circulated in the industry that Homeplus Co. had prepared an amendment to the rehabilitation plan, the court's statement that it had not been officially submitted leaves the next steps to the court's judgment. According to the industry, Homeplus Co. is known to have prepared an amendment reflecting business improvement effects from self-help efforts in the existing revised rehabilitation plan.
The amendment is said to state that since the start of the rehabilitation proceedings, the number of stores has been reorganized from 126 to 67 and the workforce has been cut to about half, reducing various expenses by 1.2 trillion won compared with just before the filing for rehabilitation. It is also said to include a projection that, once product supply normalizes, operating profit could reach the 80 billion won range, and could increase to 150 billion won within three years.
Homeplus Co.'s preparation of an amendment is seen as a response to the court's questioning of the feasibility of the existing rehabilitation plan. Earlier, the court said that no realistic plan had been presented regarding the additional 200 billion won in funding contained in the existing plan, and it had requested that opinions on excluding the rehabilitation plan and terminating the rehabilitation proceedings be submitted by that day.
The key issue is the additional 200 billion won in funding. The amendment that Homeplus Co. is said to have prepared contains expense reductions and profitability improvement projections, but reportedly does not include a plan to secure the additional funds. Because the funding issue—central to the rehabilitation plan—remains unresolved, it is uncertain whether the court will extend the approval deadline again.
Under the Debtor Rehabilitation and Bankruptcy Act, the principle is that the approval deadline for a rehabilitation plan is one year from the commencement of the rehabilitation proceedings. However, if there are unavoidable reasons, it can be extended for up to six months. In the Homeplus Co. case, a four-month extension was previously granted, pushing the deadline to July 3. There remains room for an additional extension of about two months.
Homeplus Co. employees and the labor union say the approval deadline for the rehabilitation plan needs to be extended. The two major Homeplus Co. unions reportedly emphasized the need for an extension on the grounds that if the corporations were liquidated, the livelihoods of more than 100,000 people, including those at partner companies, could be put at risk.
The court is expected to decide whether to extend the approval deadline or to terminate the rehabilitation proceedings after comprehensively reviewing stakeholder opinions, the feasibility of the rehabilitation plan, and prospects for raising additional funds. With the court stating that a revised rehabilitation plan has not been officially submitted, whether Homeplus Co. can present, within the remaining time, a level of feasibility that meets the court's requirements has become a final sticking point.
In the industry, there is speculation that the court may give another chance in consideration of the impact on local communities, employment, and partner companies. On the other hand, if the plan to raise the 200 billion won in funds—cited as a core problem of the existing rehabilitation plan—still has not been prepared, it cannot be ruled out that the court will find it difficult to grant any further extension.
Meritz Financial Group is currently said to have limited its support to 100 billion won, conditioned on a guarantee from Chairman Kim Byung-ju of MBK. MBK is reportedly saying it is difficult to accept this. Unless the gap over additional funding is bridged, the course of Homeplus Co.'s rehabilitation proceedings is likely to reach a critical turning point ahead of the July 3 approval deadline.