Homeplus scraps voluntary retirement plan as financial crisis deepens

Surge in applicants raises fears of cash drain, talent exodus; severance payments hinge on 300 billion won loan

Homeplus has scrapped a voluntary retirement program it had been pursuing for employees at stores slated for closure, citing fears of a large-scale outflow of cash and personnel. With no clear path out of its financial crisis, critics say the retailer is effectively heading toward liquidation.

According to industry sources Wednesday, Homeplus withdrew the voluntary retirement plan for employees at the rank of "team leader and above" working at 37 stores across the country that the company decided to close earlier this month. The move came after the number of applicants exceeded expectations, raising concerns about significant severance costs and the loss of key staff.

"The voluntary retirement program has been canceled, but consolation payments under the asset liquidation support system and the employment stability support system will proceed as planned," a Homeplus spokesperson said. The asset liquidation support system provides employment stability payments — calculated based on years of service and other factors — to employees who wish to leave the company. Homeplus is currently accepting applications from employees at the closing stores.

Whether the asset liquidation support system will function as intended remains uncertain. Homeplus has said severance payments can only be made if its creditors approve a debtor-in-possession loan and the rehabilitation court agrees to extend the corporate rehabilitation proceedings. The company's financial difficulties are in effect blocking even an orderly exit for employees at the closing stores. With promised reassignments to other locations also failing to materialize, those workers have been placed on what amounts to forced leave.

Homeplus's financial position continues to deteriorate. According to the company's disclosure for fiscal year 2025 (March 2025 to February 2026), total assets stood at approximately 7.304 trillion won, while liabilities nearly matched that figure at 7.065 trillion won. Short-term borrowings due within one year total 290.7 billion won, and current portions of long-term debt maturing within a year amount to 1.315 trillion won — yet immediately available cash stands at just 10.4 billion won. Sales fell from the previous fiscal year to 5.796 trillion won, while operating losses widened 74 percent to 546.4 billion won. Net losses surged 48 percent to 1.001 trillion won.

EY Han Young, Homeplus's auditor, issued a disclaimer of opinion for the second consecutive year, citing substantial operating and net losses as well as borrowings callable within one year. The firm said these factors "raise significant doubt about the company's ability to continue as a going concern."

Homeplus has asked Meritz Financial Group, its largest creditor, for a 200 billion won DIP loan, following an earlier request for a 100 billion won ultra-short-term bridge loan. In a statement, Homeplus said "the most urgent task at present is to secure operating funds that will allow us to maintain stable operations and complete structural reforms until the sale process is finalized." Meritz has not moved, demanding a personal guarantee from Kim Byung-ju, chairman of MBK Partners, Homeplus's majority shareholder.

The two sides remained at an impasse Tuesday at a closed-door meeting at the National Assembly, organized by the Democratic Party of Korea's task force on the Homeplus crisis. Meritz again demanded a personal guarantee from Chairman Kim, while Homeplus reiterated that such a guarantee was not possible, according to those present. "Both sides kept pointing fingers at each other, and there were sharp rebukes asking whether they were determined to push this into liquidation," one attendee said. The Democratic Party plans to consider holding additional hearings on the Homeplus situation after negotiations over the second-half Assembly leadership are concluded.

A banner announcing the suspension of operations hangs at the Homeplus Myeongmok branch in Jungnang-gu, Seoul. [Herald DB]

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