A Homeplus store in central Seoul before opening on Thursday, the day the Seoul Bankruptcy Court ordered the termination of the retailer's court receivership proceedings. [Herald DB]
A Homeplus store in central Seoul before opening on Thursday, the day the Seoul Bankruptcy Court ordered the termination of the retailer's court receivership proceedings. [Herald DB]

A court's decision to terminate Homeplus's restructuring proceedings has left the hypermarket chain roughly two weeks from bankruptcy. Securing 200 billion won ($129 million) in emergency operating funds within that window could revive the process, but the chances of that happening are slim.

The Seoul Bankruptcy Court terminated Homeplus's court receivership on Thursday, saying the company could restart restructuring proceedings if it raised 200 billion won and filed an immediate appeal within 14 days. With July 17 falling on a public holiday, the retailer would in effect need to secure the funds by July 16 at the latest.

The central question is how to raise 200 billion won. MBK Partners, Homeplus's majority shareholder, has said it and Chairman Kim Byung-ju would provide a joint guarantee if Meritz Financial Group — the largest creditor — lends the full 200 billion won. Meritz, however, has held firm that it can extend no more than 100 billion won in operating funds.

With the two sides locked in a dispute — including conflicting claims over the joint guarantee — analysts increasingly expect Homeplus to fail to raise the money and proceed toward bankruptcy. That would likely mean the sale of 62 company-owned stores and the loss of jobs for up to 100,000 direct and indirect employees. The owned stores are held as trust collateral by Meritz, making them available for disposal. However, a sluggish hypermarket sector and a weak real estate market are expected to complicate that process as well.

Store operations are expected to deteriorate further over the coming two weeks. Homeplus is already struggling to receive adequate supplies of fresh produce — including eggs and milk — along with many other products, disrupting normal operations. Suppliers uncertain about recovering payment in the event of bankruptcy may become even more reluctant to deliver goods.


spa@heraldcorp.com