Homeplus scraps voluntary retirement plan amid financial crisis

Homeplus has scrapped a voluntary retirement program for employees at stores slated for closure, citing concerns over costs and workforce losses. With no clear path out of its financial crisis, critics say the retailer is effectively moving toward liquidation. Major shareholder MBK Partners has said it will provide a joint guarantee on 100 billion won (about $72.5 million) in debtor-in-possession financing, but questions remain over whether the pledge will make a meaningful difference.

According to industry sources, Homeplus this month withdrew its voluntary retirement plan for employees at the managerial level and above at 37 stores nationwide that the company decided to close earlier this month. The unexpectedly high number of applicants would have generated significant severance costs and triggered a damaging loss of staff.

"The voluntary retirement program has been canceled, but the consolation payments under the asset liquidation support scheme and the employment stability support program will proceed as planned," a Homeplus spokesperson said. The asset liquidation support scheme provides employment stability payments — calculated based on years of service and other factors — to employees who wish to leave the company. Homeplus is currently accepting applications from employees at closing stores.

Whether the asset liquidation support scheme will function as intended is far from certain. Homeplus has said severance payments can only be made if creditors extend emergency operating loans and the rehabilitation court approves a further extension of the corporate rehabilitation process. The company's financial difficulties are effectively blocking even a normal departure for employees at closing stores. With promised reassignments to other locations also failing to materialize, those workers have been left in what amounts to forced leave.

Homeplus's financial position continues to deteriorate. According to the company's fiscal year 2025 disclosure (March 2025 to February 2026), total assets stood at approximately 7.304 trillion won while liabilities reached 7.065 trillion won — nearly matching assets. Short-term borrowings due within one year totaled 290.7 billion won, while current portions of long-term debt maturing within a year amounted to 1.3152 trillion won. Yet immediately available cash stood at just 10.4 billion won. Sales fell from the prior period to 5.7963 trillion won, and operating losses widened 74 percent to 546.4 billion won. Net losses surged 48 percent to 1.001 trillion won.

EY Han Young, Homeplus's auditor, issued a disclaimer of opinion for the second consecutive year, citing substantial operating and net losses as well as borrowings callable within one year as grounds for "significant doubt about the company's ability to continue as a going concern."

Homeplus has asked Meritz Financial Group, its largest creditor, for 200 billion won in DIP financing, following an earlier request for a 100 billion won ultra-short-term bridge loan. In a statement, Homeplus said "the most urgent task at present is securing operating funds that will allow us to maintain stable operations and complete structural reforms until the sale process is finalized." Meritz has not moved, demanding a personal guarantee from MBK Chairman Kim Byung-joo.

The two sides remained at an impasse at a closed-door meeting held at the National Assembly on Tuesday, organized by the Democratic Party of Korea's task force on the Homeplus crisis. Meritz again demanded a personal guarantee from Chairman Kim, while Homeplus reiterated that such a guarantee was not possible, according to those present. "Both sides kept pointing fingers at each other, and there were sharp rebukes asking whether they were determined to push this into liquidation," one attendee said. The Democratic Party said it plans to consider holding additional hearings on the Homeplus situation after negotiations over the second-half Assembly leadership are concluded.

One day after the meeting, on Wednesday, MBK issued a statement saying it "plans to provide a joint guarantee as a shareholder on 100 billion won — half of the 200 billion won in emergency operating funds." With the additional guarantee, the total funds and credit MBK has committed on behalf of Homeplus rises to 500 billion won. MBK had also directly provided 100 billion won in March, including through Chairman Kim's personal bond contributions.

The move shifts the ball to Meritz's court. However, Meritz's reluctance to extend further loans and doubts over whether 200 billion won in DIP financing alone can secure Homeplus's rehabilitation are seen as significant constraints. Internally, some analysts estimate that unpaid employee wages accumulated over the past two months alone amount to nearly 100 billion won.