Homeplus at a Crossroads as Creditors Prepare to Decide on Rehabilitation Plan

Homeplus faces a decisive creditors’ meeting on Sept. 2, when secured creditors, ordinary creditors and shareholders will vote on the supermarket chain’s rehabilitation plan.

Under South Korea’s Debtor Rehabilitation and Bankruptcy Act, approval requires at least 75% support from rehabilitation secured creditors, 66.7% from rehabilitation creditors and 50% from shareholders. If all three groups meet their thresholds, court approval would be highly likely, according to legal experts cited in the report.

The response of public-interest creditors will also matter. These creditors, including suppliers and employees, do not vote at the meeting, but the court may view stronger support for staggered repayment as evidence that the plan can be carried out. Unpaid supplier trade claims alone amount to about 500 billion won.

As of Aug. 31, 59% of public-interest creditors had agreed to installment repayment. The figures were 64.4% for suppliers’ goods payments and 87.9% for employee claims. Homeplus has proposed repaying all public-interest claims within three years.

The suppliers’ creditors’ council has objected that goods payments would receive only a 0.5% repayment rate over three years, making the timing and terms far less favorable than those for wages and secured claims. Homeplus says creditors would face no disadvantage by accepting installments and is continuing to seek support before the meeting.

The company reopened 67 stores on Aug. 13 and recorded 116.4 billion won in sales through Aug. 30, but supply problems have continued. If any of the three voting groups fails to meet its threshold, the plan could be rejected. With the court’s approval deadline set for Sept. 4, another vote may not be possible. The court would then consider ending the rehabilitation process or imposing approval, and termination could cause widespread losses for creditors.