(LEAD) Court approves corporate rehabilitation plan for Homeplus

Seoul's bankruptcy court has greenlit Homeplus Co.'s corporate rehabilitation plan, paving the way for the financially struggling discount store chain to restart operations. The court's decision came shortly after creditors and shareholders approved the plan during a meeting earlier on Wednesday. Homeplus, wholly owned by private equity firm MBK Partners, filed for corporate rehabilitation in March 2022 due to a declining credit rating and liquidity issues.

The rehabilitation plan hinges on increasing profitability by narrowing down its business to focus on profitable stores, while simultaneously selling some stores to repay creditors.

MBK Partners Vice Chairman Kim Kwang-il stated that the key to the plan is securing profitability. Upon approval, Homeplus will commence repaying its debts according to the rehabilitation plan. The court intends to conclude the proceedings once the company starts making repayments. The troubled retailer had temporarily shut down its outlets starting from July 13 due to a lack of operating capital and challenges in maintaining store operations.

A crucial aspect of the corporate rehabilitation plan is to repay debts by selling assets. Homeplus aims to sell 19 closed stores by February 2028, using the funds to repay a portion of its debts totaling 1.3 trillion won (US$950 million). The Homeplus union expressed optimism that the court's approval of the rehabilitation plan should mark the beginning of normalizing the retailer's operations.