(LEAD) Court ends rehabilitation process for troubled retailer Homeplus

Court Extends Homeplus Rehabilitation After Appeal; Funding Secured

SEOUL — A Seoul bankruptcy court on Tuesday canceled its earlier decision to terminate Homeplus' corporate rehabilitation proceedings, extending the process until September 4 after the struggling discount store chain lodged an appeal.

The Seoul Bankruptcy Court said the appeal was recognized after Homeplus secured new operating funds, according to a statement reported by Yonhap News. The court had previously terminated the proceedings on July 3, finding that the company failed to secure at least 200 billion won (US$134 million) required to carry out its restructuring plan.

Homeplus filed an immediate appeal on Monday afternoon, the company said in a press release, following an agreement by its largest creditor, Meritz Financial Group, to provide financing in exchange for a full payment guarantee from private equity firm MBK Partners, the retailer's sole owner.

The decision to extend the proceedings reverses a ruling that had pushed Homeplus closer to bankruptcy. The company had temporarily closed all its remaining 67 operating outlets nationwide starting July 13 due to a lack of operating capital and difficulties in maintaining store operations, according to the South China Morning Post.

The crisis at Homeplus, once South Korea's second-largest hypermarket chain, reflects broader challenges facing the discount retail sector amid a shift to online shopping. Nearly 80 percent of South Koreans now shop online, according to a 2025 survey by Statista cited by the South China Morning Post, and online platforms accounted for more than 60 percent of major retailers' total sales earlier this year, per a May report by the country's trade ministry.

MBK Partners acquired a 100 percent stake in Homeplus in 2015 from British retailer Tesco Plc for 7.2 trillion won (US$4.9 billion). The retailer entered court-led rehabilitation proceedings in March 2025 after mounting financial difficulties amid an industrywide downturn.

Financial Support Measures

Meritz Financial Group agreed last week to extend 200 billion won in fresh funding, enabling Homeplus to appeal the termination decision. The company welcomed the move, saying labor unions, MBK Partners and Meritz had agreed to continue the rehabilitation process based on mutual cooperation and concessions.

Meanwhile, major commercial banks announced support measures for Homeplus suppliers. Shinhan Bank said it will offer low-interest loans of up to 500 million won with interest rate discounts of up to 1 percentage point, and waive overdue interest charges for delinquent borrowers. Hana Bank will provide emergency business capital loans of up to 500 million won with discounts of up to 1.3 percentage points. Woori Bank and Kookmin Bank also unveiled similar measures.

The government has pledged continued support for workers and businesses affected by Homeplus' troubles. The Ministry of Finance and Economy held a task force meeting to review progress, and the labor ministry has provided consultation services in 1,935 cases as of Thursday. The government earlier pledged up to 21 million won to each employee with unpaid wages, along with low-interest loans of up to 10 million won at 1.5 percent interest. So far, 41 billion won has been disbursed through the loan program in 8,934 cases.

Regulatory Action Against MBK Partners

The Financial Supervisory Service (FSS) has decided to impose a penalty on MBK Partners over its management of Homeplus, including a suspension of duties, citing improper business practices and violations of internal control obligations. FSS Governor Lee Chan-jin said during a parliamentary session that disciplinary proceedings are ongoing following an on-site inspection, and vowed to proceed transparently and promptly. The penalty must still be approved by the Financial Services Commission before becoming final. Yonhap reported that this marks the first time the watchdog has taken such severe action against a general partner of an institutional private equity fund.

Outlook

With the rehabilitation proceedings extended, Homeplus has gained time to pursue its restructuring. However, industry observers note that challenges remain, including finding a buyer and addressing disputes over responsibility between MBK Partners and creditors. The court's decision allows the company to continue operations while it works to secure a viable path forward.