Homeplus rehabilitation proceedings terminated; chairman faces probe

A South Korean court has terminated the rehabilitation proceedings for retail giant Homeplus, ending its 16-month stint in court receivership. The decision came after the court deemed the company's recovery plan unfeasible.

Adding to the company's woes, its parent company's chairman, Kim Byung-ju of private equity firm MBK Partners, is under investigation. Prosecutors allege that Kim and others sold 82 billion won worth of short-term bonds while knowing Homeplus's credit rating would decline. This action allegedly caused losses for suppliers and investors. Prosecutors had previously sought an arrest warrant for Kim in January, but it was dismissed by the court. This case echoes past instances where major shareholders faced legal consequences for similar actions.

For example, Yoon Seok-금, former chairman of Woongjin Group, received a suspended prison sentence for issuing 100 billion won in corporate bonds despite anticipating a credit rating downgrade. Similarly, former Tongyang Group chairman Hyun Jae-hyun was sentenced to seven years in prison for selling 170.8 billion won in bad corporate bonds as safe investments. Former STX Group chairman Kang Duk-soo also received a suspended sentence for forcing subsidiaries to purchase corporate bonds from STX Construction during a market downturn.

However, not all companies seeking rehabilitation have met a grim fate. E-commerce firm TMON, which entered court receivership in 2024, was successfully acquired by Oasis in April of the following year. The court concluded TMON's rehabilitation process in August, noting that 96.5% of its debts had been repaid. In contrast, TMON's former affiliate, WeMakePrice, was declared bankrupt in November after failing to find a new owner. Interpark Commerce, another affiliate, also faced bankruptcy in December after its application for a voluntary restructuring program stalled due to a lack of potential buyers.