Homeplus Co., which arranged a plan to raise 200 billion won in emergency working capital, immediately appealed against the court's decision to terminate its corporate rehabilitation proceedings.
On the last day of the immediate-appeal deadline, at about 4 p.m. on the 20th, the Homeplus Co. administrator filed a notice of immediate appeal with the Seoul Bankruptcy Court's Rehabilitation Division 4 (Chief Judge Jeong Jun-young, presiding judge; Senior Judge Park So-young, reporting judge).
Homeplus Co. is said to have filed the immediate appeal seeking to have the termination decision canceled through a "device of re-do" under which the original court corrects its own prior decision.
The device of re-do is a system that allows the original court, if it finds justifiable grounds for an appeal, to cancel or modify its prior decision on its own before sending the case to a higher court. An appeal being filed does not necessarily cancel the termination decision, but if the original court recognizes justifiable grounds for the appeal, it must revise the prior ruling.
If the rehabilitation court cancels the termination decision through the device of re-do, Homeplus Co.'s rehabilitation proceedings will resume. The court will restart the process for a stakeholders' meeting to review and vote on the rehabilitation plan and may reset the voting deadline within the statutory final date of Sept. 4. The rehabilitation plan must meet the statutory approval requirements for each class, including rehabilitation creditors and secured rehabilitation creditors.
If the rehabilitation court maintains the termination decision, the case will go to the appellate division of the Seoul High Court. Under the Civil Procedure Act, the principle is to send the appeal record to the appellate court within two weeks from the date the notice of appeal is filed.
Earlier, on the 3rd, the rehabilitation court terminated Homeplus Co.'s rehabilitation proceedings. It came 1 year and 4 months after the proceedings began in March last year.
The bench found that Homeplus Co. failed to specifically explain how it would raise the minimum 200 billion won in working capital needed to implement its rehabilitation plan, and judged that the plan was not feasible. The rehabilitation plan and its amendment submitted by Homeplus Co. were not even put to review and a vote at the stakeholders' meeting.
The sale of the Homeplus Express business unit went through, but mergers and acquisitions (M&A) for the remaining units, including headquarters, hypermarkets, and the online mall, did not materialize. While operations continued, sales declined, whereas public-interest claims with priority for repayment—such as wages, payments for goods, and taxes—increased, which also factored into the termination decision.
However, the court left room that if Homeplus Co. actually raises the minimum 200 billion won in working capital within the immediate-appeal period and files an immediate appeal, justifiable grounds for the appeal could be recognized.
If the termination decision is finalized and grounds for bankruptcy are recognized, the process may proceed to the court declaring bankruptcy ex officio. The possibility was also raised of mass unemployment for about 12,000 employees affiliated with Homeplus Co. and a chain reaction of damage to stakeholders such as suppliers and tenant businesses.
But MBK Partners, the largest shareholder of Homeplus Co., and Meritz Financial Group, the largest creditor, have differed over the size and method of working-capital support and the scope of joint guarantees. As funding was delayed, Homeplus Co. temporarily closed its headquarters and hypermarket stores starting on the 13th, citing depleted working capital and difficulties in facility maintenance and management.
Subsequently, as MBK Partners and MBK Partners Chairman Kim Byung-ju agreed to provide a joint guarantee for the full loan amount, the funding negotiations were concluded. Meritz Fire & Marine, Meritz Securities, and Meritz Capital—the three Meritz Financial units—each held a board meeting on the 16th and approved lending 200 billion won in emergency working capital to Homeplus Co..
However, the boards' approvals at the three Meritz Financial units alone do not allow one to conclude the funds have actually been executed. Nor does the filing of an immediate appeal automatically restart Homeplus Co.'s rehabilitation proceedings.
The rehabilitation court will review the practical executability of the emergency working-capital loan and the feasibility of the amended rehabilitation plan to decide whether to revise the termination decision. Even if the rehabilitation proceedings resume, the tasks remain of securing a buyer for the remaining business units and meeting the statutory approval requirements for the rehabilitation plan.