Kim Gwang-il 'deeply apologizes' to creditors; rehabilitation proceedings to close upon debt repayment

A court has approved the rehabilitation plan submitted by Homeplus, which is undergoing corporate rehabilitation proceedings. Pictured is a Homeplus store in Seoul on Wednesday. [Yonhap]
A court has approved the rehabilitation plan submitted by Homeplus, which is undergoing corporate rehabilitation proceedings. Pictured is a Homeplus store in Seoul on Wednesday. [Yonhap]

A court has approved the rehabilitation plan submitted by Homeplus, which is undergoing corporate rehabilitation proceedings. Once the debt repayments outlined in the plan are carried out, the rehabilitation process will move toward closure.

The Seoul Bankruptcy Court's Fourth Rehabilitation Division, presided over by Chief Judge Jeong Jun-yeong, convened a creditors' meeting Wednesday to vote on the plan and immediately issued an approval ruling after the plan passed.

The ruling formally authorizes Homeplus to repay its debts and carry out the steps needed to restore normal operations under the rehabilitation plan.

Immediately after the vote, the court announced: "We declare that the rehabilitation plan has been passed, with 100 percent approval from secured creditors, 75.90 percent approval from unsecured creditors, and 100 percent approval from shareholders."

Passage required the support of at least 75 percent of secured creditors, at least 66.7 percent of unsecured creditors, and at least 50 percent of shareholders.

After announcing the results, the court said it recognized that the plan met the requirements for approval, citing factors including the consent of more than two-thirds of public-interest creditors, and issued its ruling immediately.

The court also urged the company to work closely with its employees and suppliers to ensure the rehabilitation plan is carried out without disruption.

The court had identified two key metrics in evaluating the plan: the overall consent rate among stakeholders, and the share of suppliers — who had not received payment for goods — willing to accept installment repayments. The consent rate among those suppliers exceeded 66 percent as of Wednesday, a key factor behind the approval.

Kim Gwang-il, vice chairman of MBK Partners, who attended the meeting as administrator, said he "deeply apologizes to the creditors who have suffered losses due to Homeplus's rehabilitation situation." He described the core of the plan as consolidating operations around profitable stores to secure profitability, while immediately selling some stores to prioritize debt repayment.

Some creditors were given the floor and voiced objections — saying the plan would "create more victims," that it was "a structure asking people living hand-to-mouth to endure 10 years," that "it would be better for the country to liquidate this company quickly," and that they had "serious doubts about its feasibility" — but they could not prevent the plan from passing.

Homeplus plans to begin carrying out its rehabilitation process in earnest, including debt repayment and restructuring.

The company will first sell company-owned stores among those already closed to repay 1.3 trillion won ($949 million) in senior secured trust bonds held by Meritz Financial Group, then take out loans using remaining company-owned stores as collateral to repay other debts.

Homeplus has also set a target of achieving sales of 4.3 trillion won and operating profit of 162.8 billion won by 2030 through cost reductions and customer growth. As part of that effort, the company will pursue a merger and acquisition of its hypermarket business.

The union called for Homeplus to restore normal operations as quickly as possible.

The Mart Workers' Union issued a statement Wednesday calling the approval "a fresh start toward normalization" and saying the company must find a buyer capable of running Homeplus sustainably and complete a successful acquisition.

The Homeplus General Union urged the company to "quickly demonstrate practical and sustainable measures to revitalize operations, such as the Trader Joe's model," adding that job security and the return of workers on leave were also urgent priorities.


mokiya@heraldcorp.com