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Homeplus Merchants Face Financial Ruin as Retailer's Rehabilitation Fails
🇰🇷 South Korea /Economy & Trade

Homeplus Merchants Face Financial Ruin as Retailer's Rehabilitation Fails

From Dong-A Ilbo · () Korean

Translated from Korean, summarized and contextualized by DistantNews.

At a glance

News Sources not specified Outcome reported
  • Homeplus is facing a crisis after a court terminated its corporate rehabilitation proceedings, pushing it towards potential bankruptcy.
  • The retail giant has failed to pay merchants, particularly corporate entities, for sales in May, exacerbating financial strain on small businesses.
  • Merchants, some of whom are personally borrowing money to pay employees, express desperation and fear of not receiving future payments.

Merchants operating within Homeplus stores are facing severe financial distress following the court's decision to terminate the company's rehabilitation proceedings. The retail giant is now on the brink of bankruptcy, leaving its tenants in a precarious situation.

I am a small business owner, why can't they pay me? I am personally borrowing money to pay my employees.

— A merchantExpressing financial hardship and frustration over delayed payments from Homeplus.

The core of the current crisis lies in Homeplus's failure to disburse sales proceeds to its merchants, particularly those registered as corporate entities, for sales made in May. Merchants typically receive their sales revenue, minus commissions, from Homeplus at the end of the following month. However, these payments have been delayed, pushing many small business owners to the edge.

Homeplus cited a lack of immediate funds, stating they prioritized payments to individual business owners due to their more vulnerable status. However, this explanation has been met with frustration. One merchant, who operates a business classified as a corporate entity for tax reasons, expressed disbelief: "I am a small business owner, why can't they pay me?" This merchant is resorting to personal loans to cover employee salaries, fearing that June's payments might also be withheld.

We have no choice but to prioritize individual business owners because we lack the funds. For corporate entities, we are doing our best to secure funds for payment.

— Homeplus representativeExplaining the company's decision to prioritize payments to individual merchants.

The situation has created a ripple effect, with merchants struggling to secure immediate funds for operational costs like payroll. While banks have offered emergency financial support for affected suppliers and tenants, many merchants feel the application process is too slow for their urgent needs. They are pleading with Homeplus for at least a payment schedule, but have yet to receive a response. Meanwhile, Homeplus insists it is working to secure funds for corporate entities, maintaining that payments are being processed under a consistent standard.

We are asking them to at least provide a payment date, but we haven't received an answer yet. I'm afraid I won't be able to receive the June payment either.

— A merchantVoicing fear and uncertainty about future payments from Homeplus.
DistantNews Editorial

Originally published by Dong-A Ilbo in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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