A Homeplus store in Seoul on Saturday, as the hypermarket chain faces the prospect of bankruptcy after a court ordered the termination of its rehabilitation proceedings. [Yonhap]
A Homeplus store in Seoul on Saturday, as the hypermarket chain faces the prospect of bankruptcy after a court ordered the termination of its rehabilitation proceedings. [Yonhap]

A court's decision to terminate Homeplus's rehabilitation proceedings has pushed South Korea's second-largest hypermarket chain to the brink of bankruptcy. Unless Homeplus secures 200 billion won ($129 million) within 14 days to file an immediate appeal, the ruling will become final — and the company will likely face liquidation rather than court-supervised restructuring.

If Homeplus fails to obtain additional funding from majority shareholder MBK Partners or its largest creditor Meritz Financial Group, the company will likely file for bankruptcy, industry sources said Saturday.

If a court declares Homeplus bankrupt, a court-appointed receiver will liquidate its assets and distribute the proceeds to creditors. In that scenario, debt recovery through asset sales would take priority over any attempt to revive the business.

Attention has turned to how the company's stores would be handled. All 62 of Homeplus's self-owned stores are held as trust collateral by Meritz Financial Group. Assets held under trust collateral can be disposed of independently by the secured creditor, outside the standard bankruptcy auction process.

Meritz Financial extended a 1.3 trillion won senior loan to Homeplus in 2024, secured against the chain's real estate and tangible assets. If bankruptcy proceedings move forward, Meritz is likely to dispose of the collateralized stores to recover the principal and interest on that loan, analysts say.

Industry observers do not expect rival retailers to snap up the stores. The prolonged slump in brick-and-mortar retail, combined with the fact that most prime, high-value locations have already been sold, makes the remaining portfolio unattractive to potential buyers.

"Most of the stores worth acquiring have already been disposed of," a hypermarket industry official said. "Given the current business environment, the remaining stores hold little appeal for an aggressive acquisition."

The market widely expects the stores to be redeveloped for other uses — mixed-use residential complexes, logistics centers or office buildings — rather than continuing to operate as hypermarkets. MBK Partners had already sold the Homeplus Dongdaemun branch before rehabilitation proceedings began; that site is now slated for a development project featuring a 49-story residential and mixed-use complex.

The ongoing slowdown in the real estate market could drag out both the asset sales and the liquidation process, analysts warned.

Homeplus has not entirely run out of options. The company can still file an immediate appeal if it raises 200 billion won within 14 days. But the gap between MBK Partners and Meritz Financial over additional funding has shown little sign of narrowing, leaving the prospect of rehabilitation deeply uncertain.

As job insecurity became a real concern, the labor union urged the government to act. The Mart Workers' Union called on the government to "mobilize every available emergency measure to devise a plan for Homeplus's rehabilitation," warning that a liquidation would "inevitably deal a severe blow to hundreds of thousands of jobs and local economies."


attom@heraldcorp.com