[Edaily Marketin Reporter Hur Jieun ] Attention is also focused on the moves of major shareholder MBK Partners amid the situation surrounding Homeplus, which is on the brink of bankruptcy. This comes as MBK—which has been warned of a severe disciplinary measure, including suspension of business operations, by financial authorities—announced it would fully repay the 160 billion won in debt-in-possession (DIP) financing using its own funds. While this appears on the surface to be a decision by the major shareholder to voluntarily absorb losses, some in the market interpret it as a strategic move to build a case for damage control ahead of the final decision on the level of sanctions.

According to financial authorities on the 15th, the Financial Supervisory Service (FSS) concluded its deliberations on MBK Partners at the third Sanctions Deliberation Committee meeting held on the 2nd. Regarding the level of sanctions, it is reported that the FSS decided to maintain the original proposal for severe sanctions—including the suspension of business operations—which was preliminarily notified last year. However, the final level of sanctions will be confirmed following a regular meeting of the Financial Services Commission.

One of the variables that could influence the final level of sanctions is “voluntary corrective efforts.” It is generally understood that when determining sanctions, financial authorities consider factors such as efforts to compensate victims or post-incident remediation as mitigating factors.

Sanction determination refers to the criteria and process of reasonably determining an appropriate level of sanction (such as a reprimand, administrative fine, suspension of business operations, or disciplinary warning) for violations of laws and regulations by an institution or individual, by comprehensively considering factors such as the motive for the violation, intent, gross negligence, and the severity of the violation.

This is why observers believe that, from MBK’s perspective—having already been warned of severe disciplinary action—demonstrating a swift and orderly resolution of the Homeplus situation could work in its favor when the severity of future sanctions is determined.

In fact, MBK announced on the same day its plan to directly repay the full 160 billion won in DIP funds injected into Homeplus using its own resources. If Homeplus enters bankruptcy proceedings, the 160 billion won DIP loan secured through MBK’s guarantee would be classified as a public-interest claim, making it eligible for priority repayment. Consequently, suspicions of a so-called “self-induced bankruptcy”—in which MBK seeks to minimize losses right up until the moment of bankruptcy—have been raised in some quarters of the market.

However, as MBK has waived its right of recourse for these funds, Homeplus’s repayment obligation has been reduced. Homeplus had originally planned to secure a total of 360 billion won in DIP financing; of this amount, MBK—not Homeplus—is responsible for repaying the 160 billion won that was actually disbursed. The remaining 200 billion won was funding that MBK intended to raise from Meritz but never actually disbursed.

Attention is also focused on the stance of the bankruptcy court. If the court declares bankruptcy on its own initiative, it would appear that the court has proactively determined that liquidation is the better course of action. On the other hand, if the debtor files for bankruptcy voluntarily, the procedural burden is relatively lighter. In this context, if Homeplus files for voluntary bankruptcy within the deadline for an immediate appeal, the court would essentially be following a procedurally natural course of action.

Ultimately, Homeplus’s bankruptcy process has become a complex interplay of three competing interests: the major shareholder’s management of sanctions risks, the largest creditor’s securing of collateral rights, and the court’s effort to minimize procedural burdens. Meanwhile, the fate of employees, business partners—who find it difficult to have their voices heard in this process—and investors in electronic short-term bonds, whose repayment priority has been pushed to the back of the line, is set to be determined by these calculations.

An investment banking (IB) industry official stated, “MBK Partners’ decision to waive its right to recover 160 billion won and declare that it would repay the debt on its own may also be intended to signal to the authorities that, as a major shareholder, it has fulfilled its social responsibilities and made efforts to resolve the situation.”