Ruling-bloc parties urge court extension for Homeplus rehabilitation, plan visits to key institutions

By Joo So-hyun, The Herald Business

With the deadline for court approval of Homeplus's rehabilitation plan approaching, five ruling-bloc parties urged the government to take an active role in mediating to prevent the retailer's liquidation. The Democratic Party's Eulji-ro Committee said it would visit the Seoul Rehabilitation Court to request an extension of the approval deadline and would hold talks with major creditor MBK Partners as well as the Financial Supervisory Service and prosecutors.

The parties — the Democratic Party of Korea, Rebuilding Korea Party, Progressive Party, Social Democratic Party and Basic Income Party — held a joint preparatory meeting at the National Assembly on Tuesday to discuss parliamentary mediation for Homeplus's rehabilitation. Speaking to reporters afterward, Democratic Party lawmaker Kim Nam-geun said the parties had decided to visit the Seoul Rehabilitation Court "to request more time to arrange debtor-in-possession financing."

"It's not that we have failed to fulfill everything the rehabilitation court asked — some has been done, and some can be executed once an agreement is reached with Meritz Financial," Kim said, adding that he expected the court to grant additional time. Eulji-ro Committee chair and Democratic Party lawmaker Min Byeong-deok added that the court's 300 billion won ($195 million) requirement was not necessarily tied to a single deadline. "The court itself leaves room for flexibility," he said.

The deadline for court approval of Homeplus's rehabilitation plan is Friday, and the rehabilitation court has asked Homeplus's creditors and labor union to submit a plan for securing 200 billion won in external financing by that date. With Homeplus having submitted a revised rehabilitation plan, industry observers expect the deadline could be extended by however long it takes the court to review the changes.

Targeting Meritz Financial, Kim said the firm could recover a substantial portion of its principal by taking proceeds from store sales and other assets even after rehabilitation proceedings began, yet was still claiming that insufficient collateral value remained to justify providing debtor-in-possession financing against 1.5 trillion won in secured assets. He said the parties would demand that Meritz Financial submit accounting data reflecting its own assessment of Homeplus's financial position, and would require MBK to provide its own assessment to the court-appointed administrator by Wednesday.

Min said Meritz Financial held "the biggest key right now" and that lawmakers could not avoid meeting the firm's decision-makers on behalf of the public. "We are requesting a meeting with the chairman of Meritz Financial," he added.

On the roles of prosecutors and the FSS, Kim said he suspected that activity related to the case had "effectively come to a halt recently." He added that if the FSS imposed sanctions, institutional investors such as the national pension fund could move to withdraw capital from the private equity fund led by MBK, and that the parties intended to verify whether that process was under way.

At the meeting, the ruling-bloc parties said the Homeplus situation was "not a problem for an individual company but a national employment crisis and a livelihood issue," and urged the government to take an active mediation role.

Jung Hye-kyung, chair of the Progressive Party's Homeplus task force, said the government could not step back simply because the case involved a private company's rehabilitation proceedings. "Preventing mass unemployment is the government's responsibility," she said, strongly urging "responsible government intervention and the injection of public funds."

Rebuilding Korea Party lawmaker Lee Hae-min said it was "never a healthy economic structure when those who have enjoyed power step aside in a crisis and leave workers and subcontractors to bear the consequences." She added that while investors could redirect their capital and creditors could negotiate over collateral, "for workers, the moment their wages stop, their lives fall apart."

Social Democratic Party leader Han Chang-min said the government was still hesitant to intervene publicly while MBK and Meritz Financial were in effect pushing toward liquidation by shifting blame onto each other. He argued that appointing Uamco (Korea Asset Management Corp.) as a third-party administrator "could provide the last opportunity to put rehabilitation back on track."