Rehabilitation Plan to Be Submitted to Court by July 10
Rising Concerns Over Job Insecurity and Unrecovered Investments
Management's Proposal Includes M&A Plans
Backlash Against Unilateral Decisions
As of June 11, it has been 100 days since Homeplus entered corporate rehabilitation proceedings (court receivership), and both employees concerned about job insecurity and individuals who suffered financial losses due to the abrupt filing for rehabilitation are ramping up the pressure. With the Democratic Party of Korea, which prioritizes the rights of small business owners and workers, becoming the ruling party following the inauguration of President Lee Jaemyung, calls for political intervention to resolve the situation have grown louder.
According to industry sources on June 11, the Emergency Response Committee for Victims of Homeplus Goods Purchase Short-Term Bond will hold a press conference on June 12 in front of the presidential office in Yongsan-gu, Seoul. At the event, they will share the stories of victims of Homeplus’s asset-backed electronic short-term bond (ABSTB) products and urge the government to intervene in resolving the crisis. These individuals are retail investors who purchased ABSTB products issued by securities firms, with card payment receivables?used by Homeplus to purchase goods?as the underlying assets. Due to Homeplus entering rehabilitation proceedings, the outstanding balance of ABSTBs is approximately 401.9 billion won, of which about 177.7 billion won is owed to individual investors.
The committee stated, "We trusted the financial companies’ assurances of safety and joined, but even after six months, no one has taken responsibility." They plan to submit a petition and an appeal to the presidential office, urging a resolution to the crisis.
Additionally, as Homeplus has decided to include a merger and acquisition (M&A) plan in the rehabilitation plan to be submitted to the court by next month and begin searching for a new owner, the Homeplus labor union is pushing back. Samil PwC, appointed as the Homeplus examiner, is scheduled to submit an investigative report to the court on June 12, assessing the company’s going-concern value and liquidation value based on its assets, liabilities, and cash flows. The rehabilitation plan must then be submitted to the court by July 10.
The rehabilitation plan will include specific measures for improving cash flow and repaying debts. Initially, after the commencement of rehabilitation proceedings on March 4, Homeplus focused on normal business operations and did not pursue a "pre-approval M&A." However, the company has now decided to include an M&A plan in the rehabilitation proposal. The plan may also include the previously considered split-off sale of Homeplus’s supermarket division (Homeplus Express) that was being pursued before the start of rehabilitation proceedings.
The Homeplus labor union has strongly objected to the possibility of an M&A, arguing that MBK Partners, the private equity fund (PEF) manager and major shareholder, made a unilateral decision to recover its investment. The Homeplus branch of the Mart Industry Union stated, "MBK is pursuing a strategy to recover as much investment as possible through store sales and divisional sell-offs," and pointed out, "In this process, Homeplus’s sustainability and worker employment issues are being completely disregarded."
Regarding the possibility of selling off Homeplus Express, the union added, "As seen in recent similar cases involving supermarket chains (SSM), after a sale, stores are converted into franchises, leading to a deterioration in employment conditions and the de facto nullification of employment guarantees. Among Homeplus Express employees, concerns about job security after a sale are becoming a reality."
Negotiations over rent with landlords of leased stores also remain an issue to be resolved. Currently, Homeplus has reached agreements to lower rents with landlords of 41 out of its 68 leased stores nationwide and expects to reach settlements with seven more. However, negotiations with the remaining 20 stores are still stalled. The union stated, "Over the past 100 days, the rehabilitation proceedings have not served as a means to save Homeplus but have instead led to store closures and large-scale job insecurity," and called on the government to establish a tripartite dialogue body to resolve the Homeplus crisis.
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