Homeplus Victims: "MBK's Shameless Act to Just Put Out the Fire"

"Repayment Targets and Schedule Must Be Clearly Disclosed"

Homeplus management’s announcement on the 14th regarding the full repayment plan of bonds was criticized by affected investors as a “shameless tactic to just put out the fire and move on.”

The Emergency Countermeasures Committee (ECC) for victims of Homeplus product purchase leaflet damage held a press conference on the 14th in front of the Homeplus headquarters in Deungchon-dong, Gangseo-gu, Seoul. Photo by Hyunji Kwon

The Emergency Countermeasure Committee for Victims of Homeplus Merchandise Purchase Short-Term Bonds (the Committee) held a press conference in front of Homeplus headquarters in Deungchon-dong, Gangseo-gu, Seoul, stating, “It is unclear which bonds (that MBK Partners intends to repay) are being referred to.” They emphasized, “The repayment status and schedule of the Asset-Backed Short-Term Bonds (ABSTB) must be clearly disclosed.”

At the press briefing, Cho Ju-yeon, CEO of Homeplus, and Kim Kwang-il, Vice Chairman of MBK Partners, the major shareholder of Homeplus, stated, “We will take full responsibility and repay all bonds to ensure that no one suffers damage from this rehabilitation process.” They expressed their intention to sequentially repay commercial claims such as payment for supplies to partners and settlement payments to leased store owners.

In response, the Committee criticized, “Homeplus should have shown efforts to repay even through emergency management before filing for corporate rehabilitation, but no such efforts were demonstrated,” and questioned, “Do they even have the right to talk about full bond repayment and responsible attitudes?”

The Committee also highlighted that the issuance of Homeplus’s short-term bonds was a ‘fraudulent act’ carried out with prior knowledge of the credit rating downgrade. They said, “Evidence is emerging that Homeplus knew about the impending downgrade of the short-term bond credit rating before the downgrade on the 25th of last month,” adding, “Nevertheless, they allowed the issuance of the short-term bonds and publicly offered 82 billion KRW through credit card companies.”

They further pointed out, “MBK Partners is the major shareholder owning 68% of Lotte Card, but took no measures such as halting sales through credit card companies,” and criticized, “Without prior collusion, such absurd acts that disrupt commercial order would not have occurred.” The Committee claims that Homeplus allowed the short-term bonds to be traded over-the-counter until the 28th of last month, prolonging the damage.

The victims reiterated their demand to have the short-term bonds recognized as commercial claims. They argue that if the short-term bonds are classified as commercial claims for payment of goods, repayment is possible, but if classified as financial claims, the likelihood of recovery is low. The Committee urged, “The government and the Financial Supervisory Service must recognize the short-term bond victims’ money taken by Homeplus as commercial claims and ensure they are repaid with priority,” emphasizing, “Homeplus and MBK Partners Chairman Kim Byung-joo must immediately return the full amount of damages to all victims who purchased the short-term bonds, even if it means using their personal assets.”

The Committee’s press conference was held urgently following the news of Homeplus’s press briefing. About 20 affected investors attended. A victim in his 40s from Yangcheon-gu, Seoul, said, “The securities firm never warned me about the risks and told me to trust only Homeplus and MBK Partners, so I invested over 1 billion KRW, but I never expected to lose the entire principal,” adding, “MBK Partners must take responsibility for the victims’ suffering, even partially. Please at least restore the principal.”