[Edaily Marketin Hur Jieun Reporter] Homeplus, which is on the verge of having its corporate rehabilitation proceedings terminated, has reached a critical juncture with the temporary closure of all its stores. With the court-imposed deadline for securing funding just one week away, this is a last-resort measure taken due to the depletion of operating funds. Market observers predict that Homeplus will forgo filing an immediate appeal—which is unlikely to succeed in extending the restructuring period—and instead proceed to file for bankruptcy on its own to protect public-interest claims.

Homeplus announced that it will begin a temporary closure of its headquarters and all large-scale supermarkets nationwide starting on the 13th. A Homeplus spokesperson explained, “Our operating funds have been completely depleted, leaving us unable to pay for merchandise, let alone cover the minimum operating costs—such as electricity and water bills—required to maintain our stores,” adding, “We will monitor the situation until the 20th, which is the deadline for filing an immediate appeal, and then decide whether to resume operations.”

Initially, on the 3rd, the Seoul Bankruptcy Court decided to terminate the reorganization proceedings, citing Homeplus’s failure to secure the 200 billion won in operating funds necessary to carry out its reorganization plan. Homeplus has until the 20th to file an immediate appeal against this decision. However, with major shareholder MBK Partners and largest creditor Meritz Financial Group unable to bridge their differences over additional financial support, it is virtually impossible to devise a feasible funding plan.

Consequently, industry observers suggest that Homeplus may voluntarily file for bankruptcy—rather than filing an immediate appeal—and proceed with what is known as “consequential bankruptcy” proceedings. “Consequential bankruptcy” is a system whereby, if rehabilitation proceedings fail to achieve their purpose and are terminated prematurely, the court immediately transitions them into bankruptcy proceedings. Under the Debtor Rehabilitation Act, if a company files for bankruptcy before the decision to terminate rehabilitation proceedings becomes final, the court may declare bankruptcy by linking it to the rehabilitation proceedings.

In particular, considering the deadline for an immediate appeal (the 20th) and the Constitution Day holiday (the 17th), the 16th is seen as the practical deadline for filing for bankruptcy. This is because documents must be submitted before the three-day court recess beginning on the 17th to ensure a smooth transition into linked bankruptcy proceedings. In this scenario, legal safeguards are in place to prioritize the protection of employee wages and severance pay, as well as payments to business partners, within the bankruptcy proceedings.

The reason for filing for bankruptcy before the deadline for an immediate appeal expires is to protect public-interest claims. Employee wages and severance pay, unpaid amounts owed to business partners, and taxes incurred during the reorganization process are classified as public-interest claims and carry the highest priority for repayment. As of the end of June, Homeplus’s public interest claims were estimated to total approximately 1.08 trillion won, comprising commercial claims such as unpaid supplier invoices (about 794 billion won), debt-in-possession (DIP) financing (161.4 billion won), taxes and public charges (82 billion won), and unpaid wages (62.5 billion won).

If the 20-day deadline is missed and the reorganization proceedings are fully terminated, followed by a separate filing for general bankruptcy, these public interest claims could be mixed with other general claims and lose their priority. On the other hand, if a related bankruptcy is established within the deadline, the public interest claims will be transferred as foundation claims—which hold the highest priority—even in the bankruptcy proceedings. This serves as the only legal safeguard to protect small suppliers and employees who trusted the company until the very end and supplied goods, even in the worst-case scenario.

Of course, the actual recoverable amount of the estate claims may vary depending on the outcome of the foreclosure on the 62 Homeplus-owned stores held as collateral by Meritz Financial. However, experts agree that only by establishing the framework of a joint bankruptcy can commercial creditors receive their share of the liquidation proceeds on a priority basis when Meritz collects its collateral and liquidates the remaining assets.

A bankruptcy attorney explained, “Since Homeplus’s public-interest claims, such as trade claims, amount to trillions of won, proceeding with a standard bankruptcy could have significant repercussions, including a domino effect of bankruptcies among small businesses.” The attorney added, “The bankruptcy petition is expected to be filed around the 16th, but the actual bankruptcy ruling is likely to be issued around the 20th, when the decision to revoke the company’s corporate status becomes final.”