[Edaily Marketin Hur Jieun Reporter] With the deadline for approving Homeplus’s reorganization plan just one day away, the recent moves by Meritz Financial Group—the largest creditor—and victims of short-term commercial paper, who are effectively subordinated creditors, are drawing attention. While they are still ostensibly urging the company to proceed with reorganization, legal experts interpret the content and timing of their messages as indicating that the creditor group is laying the groundwork for a potential bankruptcy.
According to investment banking (IB) and legal circles on the 2nd, Meritz stated in a brief submitted to the Seoul Bankruptcy Court that “additional DIP (distressed interim financing) can only be secured if the major shareholder, MBK Partners, makes responsible decisions, such as providing guarantees,” and requested that the court strengthen procedural oversight and supervision of MBK and the investigation committee, Samil PwC. Legal experts interpret this as a departure from the general, theoretical language typically found in creditor opinion submissions.
Of particular note is the scale of support proposed by Meritz. Meritz has limited the amount of support it is willing to provide to Homeplus to approximately 100 billion won, while making a personal payment guarantee from MBK and Chairman Kim Byung-ju a prerequisite. Meritz maintains that this request is a legitimate demand for risk management through guarantees. On the other hand, MBK insists that it is difficult to accept personal guarantees. The gap between the two sides has not narrowed even as the deadline approaches.
Legal experts view Meritz’s recent brief not so much as a signal that it “will help ensure the financing goes through,” but rather as an attempt to establish a strong legal record stating that “if the financing falls through, the responsibility lies with the major shareholder for refusing to provide the guarantee.” In fact, the prevailing view within the industry is that Meritz’s provision of additional DIP financing is effectively a non-starter.
The Focus Shifts to “Calls for Sanctions and Investigations”
A similar trend can be observed in the actions of the Emergency Response Committee for Victims of Short-Term Commercial Paper, which represents subordinated creditors. The Emergency Response Committee is holding back-to-back press conferences today—one in front of the Financial Supervisory Service to call for sanctions and another in front of the Supreme Prosecutors’ Office to demand an investigation. Previously, on the 26th of last month, the committee held a press conference in front of MBK Partners’ headquarters calling for Chairman Kim Byung-ju to contribute his personal assets, and on the 1st of this month, it held a press conference in front of the Seoul Central District Prosecutors’ Office calling for an investigation leading to the arrest of Chairman Kim and Vice Chairman Kim Kwang-il, who also serves as CEO of Homeplus.
The market is taking note of how the Emergency Committee’s focus is shifting from appeals to the bankruptcy court toward exerting pressure on the prosecution and financial authorities. Analysts suggest that the committee has moved beyond simply urging an extension or successful completion of the bankruptcy proceedings and is now focusing its efforts on simultaneously pushing for criminal liability and sanctions from financial authorities—a separate track from the bankruptcy process.
In fact, the Financial Supervisory Service (FSS) has already given MBK advance notice of severe disciplinary measures, including suspension from duties, and it is reported that the Sanctions Deliberation Committee proceedings are imminent this month. FSS Governor Lee Chan-jin stated at a press briefing last month, “The sanctions hearing for MBK is scheduled for early July,” adding, “Preparations are almost complete. You can assume a conclusion will be reached.”
A lawyer specializing in reorganization and bankruptcy explained, “Regardless of the success or failure of the reorganization proceedings, the process of holding parties accountable is proceeding simultaneously,” adding, “It appears that creditors, too, rather than relying solely on the possibility of relief through the reorganization plan, are seeking to enhance the effectiveness of redress by pursuing criminal and administrative liability separately.”
The possibility of an extension remains a variable
However, there are counterarguments that it is too early to conclude that the rehabilitation process is coming to an end. On the 29th of last month, Homeplus submitted a revised rehabilitation plan to the court that reflects cost savings of approximately 1.2 trillion won, achieved by reducing the number of large-scale supermarket stores from 126 to 67. Some observers believe there is still a possibility that the court may extend the approval deadline by an additional one to two months based on this proposal. In fact, the current deadline (July 3) itself is the result of two previous extensions.
However, even if the deadline is extended, the key variable—securing DIP financing—remains unresolved. The prevailing view in the industry is that unless the issue of raising the 200 billion won needed for operating capital is resolved, the reorganization plan will inevitably hit the same roadblock again.
