Financial Sector to Provide 300 Billion Won in Emergency Liquidity to Homeplus Suppliers

South Korean financial institutions are stepping in to support small and medium-sized suppliers of Homeplus, a major retail chain, following the Seoul Receivership Court's decision to terminate its rehabilitation proceedings. The financial sector plans to provide up to 300 billion won (approximately $215 million USD) in emergency liquidity to mitigate potential damages to these businesses.

The Financial Services Commission (FSC) announced the support measures after a meeting with the Financial Supervisory Service and major banks. The Korea Credit Guarantee Fund (KCGF) will newly include Homeplus suppliers who have suffered direct or indirect losses as beneficiaries of its "Crisis Response Special Guarantee." This program, initially launched in May last year to aid companies affected by trade issues, will see its loan limit for working capital increased from 300 million won to 500 million won per company. The guarantee fee will also be reduced by 0.5 percentage points. The KCGF has earmarked up to 300 billion won specifically for Homeplus-related businesses.

Commercial banks have also been actively supporting Homeplus's suppliers. Since Homeplus initiated receivership proceedings in March 2023, banks have extended approximately 5 trillion won in financial assistance. This includes extending maturities on loans backed by accounts receivable by 4.89 trillion won for 4,454 businesses and deferring repayments totaling 122.3 billion won for 2,999 businesses. Additionally, 15.8 billion won in new emergency loans were provided to 93 businesses.

Shin Jin-chang, Secretary-General of the FSC, urged financial institutions to continue offering support, including further maturity extensions and repayment deferrals, to alleviate the financial difficulties faced by Homeplus's suppliers. The Seoul Receivership Court decided on July 3rd to terminate Homeplus's receivership. However, the court may reconsider this decision if a concrete acquisition plan or new funding strategy is presented within the 14-day appeal period following the court's notice.

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Going forward, please carefully consider additional maturity extensions and repayment deferrals to alleviate the financial difficulties faced by small and medium-sized suppliers.