Victims of Homeplus Leaflet Damage Take First Collective Action... Will It Be Recognized as a 'Commercial Transaction Claim'?

"We trusted the credit of Homeplus and the card companies and conducted transactions. Since this is a claim for goods purchase, it should be classified as a commercial claim and the damage should be recognized."

As Homeplus, the second-largest large-scale mart in Korea, entered corporate rehabilitation, investors in asset-backed short-term electronic bonds (ABSTB) who suffered losses have finally taken collective action on the 12th. They argue that the ABSTB, amounting to 401.9 billion KRW and whose repayment has been suspended, should be classified as commercial claims and repaid normally. The key issue is whether this claim will be accepted, as classifying it as a financial claim would mean investors bear all losses. Securities firms, concerned about potential 'mis-selling' controversies, are also supporting the investors' voices.

The ‘Homeplus Securitized Short-Term Bond Victims Countermeasure Committee’ (Countermeasure Committee) held a rally and press conference in front of the Financial Supervisory Service in Yeouido, Seoul, demanding the classification of the bonds as commercial claims. They stated, "The ABSTB in question are short-term bonds with a three-month maturity issued through Hyundai Card, Lotte Card, and Shinhan Card for Homeplus to pay for goods purchases," and "They are the same as commercial claims made in trust of the credit of Homeplus and the card companies." They also urged the Financial Supervisory Service and the government to take swift action, pointing out that Homeplus, which promised to pay the goods purchase amount normally, is not returning the money they lent, classifying it as financial claims. The amount sold to individual and corporate investors among the problematic ABSTB is estimated to be about 300 billion KRW.

The key issue is how the court will define Homeplus’s ABSTB, which has entered rehabilitation proceedings. Since it is based on the mart’s card payments, it has characteristics of both financial debt and commercial debt, leading to divided opinions even within the financial industry.

Those who evaluate it as a financial claim emphasize that the ABSTB was traded through a special purpose company (SPC) and financial institutions, thus effectively having the nature of a financial product. Investors also do not have a direct commercial relationship with Homeplus. A representative from a major securities firm said, "Commercial claims generally arise from transactions between partner companies and businesses. The creditor is not a financial institution," and added, "Even if it has a commercial nature, the court may view the claim as a financial claim whose nature changed during the securitization process involving financial institutions."

On the other hand, there are strong voices that it should be regarded as a commercial claim because it is based on the goods payment Homeplus must make. Previously, Korea Ratings disclosed a report stating that the credit risk of the ABSTB is linked not only to Homeplus but also to the credit of Hyundai and Lotte Cards, which must pay the amounts recovered from Homeplus to the SPC. This shows the characteristics of a commercial claim. The Countermeasure Committee also emphasizes this point.

Securities firms involved in this issue have also set a policy to negotiate with Homeplus so that the ABSTB can be recognized as commercial claims. This is partly due to concerns that the situation could escalate into a mis-selling controversy, as investors were not properly informed of the risks surrounding Homeplus ABSTB. If not recognized as commercial claims, it is expected that a series of lawsuits against Homeplus and MBK Partners will follow in the securities industry.

At the Countermeasure Committee’s press conference, criticism of Homeplus’s major shareholder MBK Partners was also voiced. A committee official said, "They rushed to file for rehabilitation to wipe out debts at once and run away, neglecting self-help measures," and criticized, "They are not taking even the minimum responsibility as major shareholders." They also stated, "This incident is viewed as a criminal act deliberately orchestrated by Homeplus in collusion with the card companies. Lotte Card and Hyundai Card have not suffered a single penny of damage from this incident and have shifted the losses onto us, the dedicated bond victims," and raised their voices, "Who is the major shareholder of Lotte Card? MBK Partners."

The National Assembly’s Political Affairs Committee plans to hold an urgent inquiry on the ‘Homeplus and MBK Partners incident’ on the 18th and summon five witnesses, including Kim Byung-joo, chairman of MBK Partners, and Cho Ju-yeon, co-CEO of Homeplus.