Homeplus's 200 billion won lifeline fails to quell supplier distrust

Homeplus, facing potential bankruptcy, has secured a 200 billion won emergency operating fund loan from Meritz Financial Group. The company plans to file an immediate appeal against the Seoul Rehabilitation Court's decision to terminate its receivership proceedings, scheduled for July 20.

Despite this financial injection, industry experts and suppliers express doubt that the funds will be sufficient to restore trust and resume normal business operations. The 200 billion won is considered inadequate to cover existing unpaid debts and the costs associated with normalizing operations. One industry insider noted that the amount is insufficient to even restock empty store shelves, let alone appease suppliers.

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The amount is insufficient to even restock empty store shelves, let alone appease suppliers.

The primary concern for suppliers, particularly those dealing with large corporations, is Homeplus's credit risk and the likelihood of recovering their payments. Some suppliers fear that continuing to supply a company in financial distress could lead to accusations of breach of duty towards their own shareholders. A representative from a food company stated, "Continuing to supply goods to a company with a D credit rating can lead to accusations of breach of duty from shareholders." They also indicated that even with the new funds, the prospect of receiving payments under previous terms is unlikely, forcing them to either halt or significantly reduce their supply.

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Continuing to supply goods to a company with a D credit rating can lead to accusations of breach of duty from shareholders.

Smaller suppliers, who are more vulnerable to cash flow issues, share similar concerns. One supplier, identified only as 'A', recalled not receiving any payment after the sale of Homeplus Express, despite expectations. They anticipate that even with the new funds, outstanding wages and other priority payments might be settled first, leaving smaller partners like themselves with nothing. Consequently, 'A' has internally decided to cease trading with Homeplus altogether.

However, some smaller suppliers, whose businesses are heavily reliant on Homeplus, expressed a willingness to resume trade if payment assurances are provided. Another supplier, 'B', whose products are custom-made for Homeplus, stated, "If Homeplus survives, we can survive too." They added that if actual payments are confirmed, they would be willing to resume supply and find ways to overcome the challenges together. According to Homeplus's rehabilitation plan submitted on June 29, unpaid amounts for goods supplied since the receivership began total approximately 410.2 billion won, with an additional 160.2 billion won owed to service providers for cleaning, parking, and security.

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If Homeplus survives, we can survive too.