Seoul Bankruptcy Court Extends Deadline to May 4
MBK Sets Condition to Waive DIP Repayment Claims
Court: "Several Companies Interested in Express Sale"
The court has extended the approval period for Homeplus's rehabilitation plan by two months, marking the first anniversary since the company entered corporate rehabilitation proceedings. MBK Partners, the private equity fund that is Homeplus's largest shareholder, expressed its intention to inject 100 billion won in emergency operating funds (DIP financing). In addition, several companies have shown interest in acquiring Homeplus Express, the supermarket chain, leading the court to determine that more time is needed to monitor the situation.
A notice informing the suspension of operations is posted at the Homeplus Gyesan branch in Gyeyang District, Incheon. Photo by Yonhap News.
The Seoul Bankruptcy Court's Division 4, which is handling Homeplus’s rehabilitation, announced on March 3 that it had accepted the extension request submitted the previous day by the Homeplus administrator and MBK Partners, thereby extending the approval period for the rehabilitation plan by two months until May 4.
According to the court, MBK Partners has pledged to provide a total of 100 billion won in DIP financing for Homeplus’s rehabilitation-50 billion won by March 4 and another 50 billion won by March 11. It is reported that this funding has been secured by offering as collateral the personal residence in Hannam-dong, Yongsan District, Seoul, owned by MBK Partners Chairman Kim Byungjoo. MBK Partners has also set a condition that, even if the corporate rehabilitation procedure is not approved and is terminated despite the extension, it will waive any claims for repayment of these funds.
The Seoul Bankruptcy Court stated, "We expect that the 100 billion won in emergency funds to be provided by MBK Partners will be able to resolve urgent debts, such as overdue employee salaries. Even if the rehabilitation plan is not approved and the proceedings are terminated, MBK Partners has agreed to waive its repayment claims for the 100 billion won, so extending the approval deadline is not expected to significantly disadvantage other stakeholders, such as rehabilitation creditors."
The court also explained that it needs time to verify whether letters of intent will be submitted by the several companies currently showing interest in acquiring the Homeplus Express division, which is up for sale. This week, the Seoul Bankruptcy Court plans to discuss the formation of a management normalization task force (TF) that will include the debtor, shareholders, and the creditors’ council.
Previously, Homeplus applied for the commencement of corporate rehabilitation proceedings on March 4 last year, and after five extensions to the submission deadline for its rehabilitation plan, it finally submitted a so-called structural innovation-type rehabilitation plan on December 29. The plan includes the separate sale of the Homeplus Express division and the closure of 41 underperforming stores over the next six years. On January 27, the company announced a voluntary retirement program for all deputy general managers and department heads and above at its headquarters. MBK Partners agreed to bear 100 billion won in DIP financing and requested Meritz Financial Group, the largest creditor, and the Korea Development Bank, a policy finance institution, to each provide 100 billion won for a total of 300 billion won in support. However, neither institution has agreed to this request.
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