Homeplus Gangseo Branch Headquarters [Yonhap News] 

With corporate rehabilitation proceedings discontinued, Homeplus is expected to enter into actual liquidation procedures this week, beginning with the suspension of store operations and the filing for bankruptcy.

As efforts to secure emergency operating funds to revive the rehabilitation plan have effectively failed and the possibility of recovery has become increasingly slim, "orderly liquidation" to minimize harm to partner companies, employees, and tenant businesses has emerged as the remaining priority.

◇ Likely to Suspend Store Operations Early in the Week and File for Bankruptcy by Week's End

According to industry sources on the 13th, Homeplus is considering a plan to sequentially suspend operations at some of its stores starting as early as the beginning of this week.

It is reported that normal operations have become difficult to maintain due to a recent exodus of facility management staff, which has raised safety concerns, and the total exhaustion of operating funds.

While the news of 50% discount sales on liquor inventory over the weekend drew crowds long enough to create checkout lines, it is unlikely that this situation will reverse the company's impending bankruptcy.

The Democratic Party's Euljiro Committee called in MBK Partners and Meritz Financial Group on the 9th to urge them to secure emergency operating funds and formulate a rehabilitation plan. Despite applying pressure from various angles, concrete financing plans have yet to be established.

In this situation, it appears Homeplus will ultimately follow the sequence of suspending store operations and then filing for bankruptcy with the court.

Although the period for an immediate appeal lasts until the 20th, the industry expects Homeplus to file for bankruptcy by the 16th at the latest.

The decision to file for bankruptcy while the appeal period is still active is interpreted as a judgment that pursuing a "bankruptcy associated with rehabilitation proceedings" (linked bankruptcy) will reduce social chaos compared to undergoing general bankruptcy procedures after the rehabilitation process is formally closed.

Empty Homeplus Daejeon Yuseong Branch. On the 5th, the frozen food section at the Homeplus Daejeon Yuseong branch displayed ice instead of food products. [Yonhap News]

◇ Little Liquid Assets Left… Conflicts Over Debt Recovery Seem Inevitable

Linked bankruptcy is a mechanism where the court, upon the closing of rehabilitation proceedings, declares bankruptcy either at the company’s request or ex officio to prevent an enterprise from being abandoned.

In the case of linked bankruptcy, the priority of public interest claims accumulated during rehabilitation is recognized as is.

However, if "general bankruptcy" proceedings are pursued separately after the closing of rehabilitation is confirmed following the expiration of the appeal period, the legal status and repayment procedures for public interest claims could change, potentially leading to confusion.

In previous bankruptcy cases of retail companies like Wemakeprice, courts often adopted linked bankruptcy procedures to protect holders of public interest claims. In some cases, companies themselves applied for linked bankruptcy to protect the interests of those who provided assistance during the rehabilitation period.

Currently, Homeplus's public interest claims are estimated at approximately 1 trillion won. A significant portion of this consists of payments for supplies to partner companies and overdue wages that occurred after the start of the rehabilitation process.

It is known that Homeplus has almost no liquid assets remaining, other than the real estate already encumbered with security interests by the creditor council, including Meritz Financial Group. Therefore, conflicts between stakeholders over debt recovery appear inevitable.

There is a possibility that the interests of partner companies, tenants, and junior creditors will clash sharply over the limited assets.

In particular, as the legal status of public interest claims may vary depending on whether linked bankruptcy is pursued, attention is expected to be focused on this issue from the beginning of the bankruptcy process.

Once the court accepts the bankruptcy filing, a bankruptcy trustee will be appointed upon the declaration of bankruptcy, and the asset liquidation and debt repayment processes will proceed sequentially.

However, since the creditor council, led by Meritz Financial Group, holds security interests in major assets, the actual asset liquidation process and debt recovery are expected to take a considerable amount of time.

After filing for corporate rehabilitation in March of last year, Homeplus attempted to secure liquidity through the sale of its Express division, but ultimately failed to sell the main entity or raise new capital.

Once the bankruptcy is filed, the focus of the Homeplus situation is expected to shift from the possibility of rehabilitation to the orderly conduct of liquidation procedures, aimed at minimizing the damage to stakeholders such as partner companies and employees.