[Why&Next]Homeplus Under Court Deadline...Leaning Toward Liquidation?

Court to make last-minute decision on continuation of proceedings
Funding outlook remains murky amid creditors' diverging calculations

The Homeplus crisis is approaching a turning point. With the deadline for court receivership set to expire next month, securing 300 billion won in emergency debtor-in-possession (DIP) financing has emerged as the biggest issue. If the structure for sharing the funding needed for rehabilitation is not finalized, it will be difficult to be confident not only about the approval of the rehabilitation plan but even about an extension of the proceedings. As the interests of the largest secured creditor holding collateral, the major shareholder that is cautious about additional capital injections, and the labor union demanding job security collide, attention is focusing on the court's final decision.

According to the industry on February 25, the Seoul Bankruptcy Court recently requested MBK Partners, the largest shareholder of Homeplus, and major creditors such as Meritz Securities, as well as the labor union, to submit their opinions on whether the rehabilitation proceedings should continue or be terminated. The court plans to decide whether to maintain the proceedings by March 4, the deadline for approval of the rehabilitation plan. Formally, the possibility of an extension remains open, but the prevailing view is that the court will strictly scrutinize the feasibility of the funding and the practicality of executing the rehabilitation plan.

The key issue is securing DIP 'firepower'...creditors' calculations diverge

At the center of the discussions is the 300 billion won DIP. DIP financing is funding that, with court approval, has priority over existing claims. For new providers of capital it serves as a safety net, but for existing creditors it effectively means the recovery waterfall is being reshuffled. This DIP is closer to the "ammunition" needed to keep the rehabilitation process going than to ordinary operating expenses.

MBK has stated that it is willing to shoulder 100 billion won, but securing the remaining 200 billion won is uncertain. One option being discussed is for Meritz Financial Group and Korea Development Bank, Homeplus’s largest creditors, to each participate with 100 billion won, but internally a cautious stance is said to be dominant.

The difference in attitude among the creditors stems from the collateral structure. Homeplus’s total debt amounts to 2.6078 trillion won. Of this, Meritz Securities, Meritz Fire & Marine Insurance, and Meritz Capital hold 1.2396 trillion won in senior trust collateral. A total of 62 stores nationwide have been pledged as collateral, and their appraised value is reportedly around 2.8 trillion won. On a simple calculation, the collateral value exceeds the size of the claims. This is why some observers believe that even if rehabilitation fails and the process shifts to liquidation, principal recovery would still be possible.

Ultimately, from Meritz’s perspective, it may be more rational to rely on its existing collateral rights rather than increase its risk exposure by participating in additional DIP financing. While new funding is necessary for rehabilitation, for creditors holding collateral there is little structural reason to rule out a liquidation scenario.

Kim Byungju, chairman of MBK Partners, who is accused of fraud involving around 100 billion won in connection with the Homeplus incident, is attending a pre-trial detention hearing (warrant review) at the Seoul Central District Court in Seocho-gu, Seoul, on January 13, 2026. Cho Yongjun, Reporter

Express sale also hinges on 'DIP first'...signs of strain already visible on the ground

In addition to the 300 billion won DIP, Homeplus has drawn up a plan to secure a further 300 billion won by selling its supermarket division, Homeplus Express. The original asking price had been in the 700 billion to 800 billion won range, but it has been lowered to around 300 billion won. With the price adjusted, multiple potential buyers are reportedly showing interest.

However, the sale is also premised on the DIP being in place. In a situation where the continuation of the rehabilitation process is uncertain, it is difficult for a buyer to rush into a deal. The structure is such that capital raising and asset sales each depend on the other as a precondition. Since an en bloc sale has already fallen through, the separate sale of the Express business is effectively seen as the last card.

As discussions over funding drag on, the business base is rapidly shrinking. The number of stores has fallen from 126 last year to 111 this month. Additional closures are planned. The company intends to reduce the number of stores to 102 by 2027.

There have been cases where wages were paid in installments or only partially paid in advance, and payment delays to partner companies have led to a sharp decline in delivery rates. Empty shelves are feeding into a vicious cycle of falling sales. With more cases of asset seizures due to tax delinquencies, the pressure on cash flow has become clearly visible.

This is evidence that the erosion of corporate value is underway, going beyond a simple liquidity squeeze. The longer the delay in securing DIP financing, the lower the chances of rehabilitation become, in a paradoxical turn of events. Although the funding is needed to buy time, its effectiveness will inevitably be limited unless restructuring and asset sales are carried out in parallel within that time frame.

Participants are holding placards at a press conference titled "Declaration of an Indefinite Hunger Strike Sit-in Demanding Solutions to the Homeplus Incident," held on the 3rd near the Blue House in Jongno-gu, Seoul by the Homeplus Branch of the Mart Industry Labor Union, Service Federation, Korean Confederation of Trade Unions. Yonhap News

Liquidation scenario gaining ground...'UAMCO-led rehabilitation' as a variable

Formally, there are three possible paths forward, but industry opinion is leaning in one direction. If the full 300 billion won in DIP funding is secured, the court can extend rehabilitation and move into a management phase that combines asset sales with restructuring. Conversely, if the funding effort collapses, the likelihood that the rehabilitation proceedings will be terminated or converted into liquidation rises sharply. A third option being discussed is to use the DIP as seed money to attract a strategic investor (SI) and overhaul the governance structure, but many observers view this as unrealistic given the current state of the hypermarket industry and the collateral structure.

A senior industry official said, "It is not sustainable to inject money alone when the interests of stakeholders are not aligned," adding, "If the DIP is not finalized, the market will effectively interpret the situation as entering a winding-down phase."

However, a new variable has recently emerged. The labor union and political circles are arguing that the rehabilitation proceedings should be extended and that United Asset Management Company (UAMCO) should be appointed as a third-party administrator. UAMCO is a private restructuring specialist established with joint investments from Korea’s six major financial holding companies (KB, Shinhan, Hana, Woori, NH Nonghyup, and IBK), as well as Korea Development Bank and Export-Import Bank of Korea. It previously took part in the STX Group workout process, helping normalize the management of some affiliates, and also participated in the Saemaul Geumgo project financing (PF) normalization fund.

Even if UAMCO leads the restructuring, the basic stance of strong measures such as asset sales, workforce reductions, and unpaid leave is unlikely to change significantly. However, some analysts say that UAMCO’s involvement could enable a more objective review of the rehabilitation plan submitted by Homeplus and help build trust among potential buyers.

The political sphere is also ramping up pressure by putting the responsibility of the major shareholder front and center. Kim Namgeun, a lawmaker from the Democratic Party of Korea, recently criticized at a party policy meeting that "although the success or failure of rehabilitation hinges on securing DIP financing, MBK is showing an attitude of bearing only part of the burden." He specifically argued that shifting the funding burden onto policy finance institutions is inappropriate, and expressed concern that if this situation continues, the court may decide to terminate the rehabilitation proceedings. Some warn that if the allocation of responsibility among stakeholders is not clearly sorted out, the issue could escalate into a political flashpoint beyond a purely financial and industrial problem.

A Homeplus union representative said, "At this point, the options have effectively been narrowed down to two: extending rehabilitation with UAMCO managing the assets, or liquidation," adding, "With only about ten days left until the deadline for the approval of the rehabilitation plan, we have taken nearly all possible steps. We are now waiting for the court to promptly decide whether the company will continue to exist."