Homeplus Notifies Some Leased Stores of Contract Termination... "Negotiations with Landlords Will Continue"

"All Employees at Affected Stores Will Have Job Security...
No Artificial Restructuring Planned"

Homeplus announced on May 14 that it has notified some of its leased store locations of contract termination after rental fee adjustment negotiations broke down.

In a statement released on the same day, Homeplus said, "Since entering rehabilitation proceedings on March 4, we have been negotiating rental fee adjustments with the landlords of a total of 61 leased stores in accordance with Article 119 of the Debtor Rehabilitation and Bankruptcy Act. We aimed to reach an agreement by the deadline for responses regarding contract fulfillment, which is May 15, but as we were unable to conclude negotiations within the deadline, we have received court approval to notify of contract termination."

Yonhap News

Article 119 of the Debtor Rehabilitation and Bankruptcy Act stipulates that during rehabilitation proceedings, the administrator has the right to choose to either terminate or fulfill a lease contract, and the counterparty may request a response from the administrator regarding contract fulfillment. If such a request is made, the administrator must respond within 30 days.

Earlier, at the beginning of last month, Homeplus requested that landlords who own the buildings where its stores are located reduce rent by 35 to 50 percent. The deadline for responses is May 15.

In response, the landlords have opposed the request, explaining that they acquired the stores through a sale and leaseback arrangement and have been using the rent paid by Homeplus to cover interest on their loans. They argued that a rent reduction could make it difficult to pay the interest.

If there is no response regarding contract fulfillment by the deadline, it will be deemed as a waiver of the right to terminate the contract.

A Homeplus representative stated, "Even after the contract termination notice, we plan to continue negotiations with the landlords," adding, "Even if an agreement is ultimately not reached, we will guarantee the employment of all employees at the affected stores, and there will be no artificial restructuring as a result."

The company also announced that it would apply the 'Employment Stability Support System' for employees at the affected stores, either reassigning them to nearby locations or providing them with certain incentives.