Supplier consent rate a key variable

Shoppers wait to enter a Homeplus store in Gangseo-gu, Seoul. [Herald DB]
Shoppers wait to enter a Homeplus store in Gangseo-gu, Seoul. [Herald DB]

Homeplus will put its rehabilitation plan to a creditor vote Wednesday, with approval seen as the likely outcome — though the rate of supplier consent to installment repayment of unpaid delivery fees remains a key variable.

Seoul Bankruptcy Court will convene a creditors' meeting at 3 p.m. Wednesday to confirm whether each class of stakeholder — secured rehabilitation creditors, unsecured rehabilitation creditors and shareholders — approves the plan. Passage requires the support of at least 75 percent of secured creditors, 66.7 percent of unsecured creditors and 50 percent of shareholders.

Retail industry observers had earlier predicted the plan would pass. MBK Partners Chairman Kim Byung-ju's personal guarantee unlocked 200 billion won ($146 million) in debtor-in-possession financing, and Homeplus has since resumed operations and worked to normalize its stores — factors seen as making it difficult for major stakeholders to vote against the plan.

The key variable is the installment-repayment consent rate among suppliers owed roughly 503 billion won in unpaid delivery fees. As of Monday, the overall consent rate for installment repayment of public-interest claims stood at 59 percent, Homeplus said. Among goods-payment creditors the rate was 64.4 percent, while employees came in at 87.9 percent. "Given the scale of the public-interest claims, more consent is needed to pass the feasibility assessment," the company said.

Suppliers do not hold voting rights at the creditors' meeting. However, public-interest creditors — who hold priority repayment rights — could affect Homeplus's recovery if they demand immediate repayment. For that reason, Seoul Bankruptcy Court called for Homeplus to secure public-interest creditors' consent to installment repayment.

Holders of Homeplus's short-term electronic commercial paper — subordinated creditors who suffered losses — have also pushed back, saying they cannot accept the current rehabilitation plan. Some observers have raised the possibility that the meeting could run long, which could in turn affect the timing of the court's final approval decision.

If the plan passes at the creditors' meeting, the court can issue its approval ruling the same day. If it fails, the court will conduct a comprehensive review — weighing the plan's feasibility, among other factors — and decide whether to grant a cram-down approval or terminate the rehabilitation proceedings. A new creditors' meeting could be convened if certain conditions are met, but in practice that is unlikely given that the deadline for passage is Friday.


soho0902@heraldcorp.com