Empty shelves, unpaid wages: Is there a way out for Homeplus?

Supply disruptions return just 3 months after operations resumed

Wages for 2.5 months unpaid; electricity bills also in arrears

Search for new owner stalls for second month after MBK's exit

Shopping baskets are displayed in a fresh-food refrigerator section at a Homeplus store in Seoul. [Yonhap]

Homeplus, which is undergoing court receivership, is facing supply disruptions again — roughly three months after it secured 200 billion won ($148 million) in debtor-in-possession financing and resumed operations.

Empty shelves have reappeared at some stores, including the Gangseo branch, Homeplus's flagship location, according to the retail industry Wednesday. Falling sales have left the company unable to pay suppliers on time, disrupting product deliveries. Some vendors have reportedly had outstanding payments deducted from their trade deposits rather than settled in cash. Although about 200 billion won in DIP financing arrived in June and July, along with roughly 300 billion won from the sale of Homeplus Express stores, the chronic supplier payment delays have resurfaced as the company's financial position has deteriorated.

The financial strain extends beyond supply payments. Employees have not received half of their August wages or their September and October salaries. A voluntary redundancy program the company launched in October was also canceled. About 400 workers had applied even without a severance bonus, and the company found itself unable to cover the accumulated back pay, retirement allowances and holiday bonuses that would have come due. The November payroll, due on the 21st, is also widely expected to be delayed.

Closed stores face the threat of power cutoffs. After Homeplus's head office fell behind on electricity bills, more than 10 shuttered locations received disconnection notices. Power was cut at the Jinjeop branch in late October and at the Paju Unjeong branch on Tuesday. Some of the 67 stores still in operation have also reportedly fallen behind on electricity payments.

A joint committee formed to address the Homeplus crisis holds a press conference in front of the fountain plaza near Cheong Wa Dae in Jongno-gu, Seoul, on Thursday, calling on the government to provide support. [Yonhap]

The prospect of further outside support has also dimmed. MBK Partners, the former majority shareholder, had been propping up Homeplus through joint guarantees and other means but has since relinquished its controlling stake. Kim Kwang-il, the MBK Partners vice chairman who had served as co-chief executive, stepped down in October. The only MBK-affiliated figures remaining at Homeplus are auditor Cheon Jun-ho and non-standing outside director Na Byeong-ok, both of whom are said to serve in a purely advisory capacity.

Progress on the rehabilitation plan has also stalled. Homeplus had committed to repaying a portion of its public-interest claims by early next year, but those claims have grown rather than shrunk. Public-interest claims include employee wages, retirement allowances and compensation, electricity bills and various taxes.

Homeplus posted 43.7 billion won in sales during its first weekend after resuming operations on Aug. 13. Since then, sales have reportedly fallen to around 30 percent of the company's target.

Merger and acquisition talks have made little headway either. With no prospective buyer emerging in nearly two months, anxiety within the company is mounting. Some in the industry have even raised the possibility that the court could declare bankruptcy on its own authority.

"Homeplus has long since lost its competitiveness as a major hypermarket operator," one industry official said. "Potential buyers are unlikely to find it attractive enough to take on all of its debt."

soho0902@heraldcorp.com