Government rushes emergency aid as Homeplus heads toward bankruptcy

The government has launched emergency support measures for workers and suppliers affected by the Homeplus crisis, after a court ruling to terminate the retailer's rehabilitation proceedings effectively put it on a path to bankruptcy. The package includes unpaid wage advances, low-interest livelihood loans, unemployment benefits and reemployment assistance for workers, along with 440 billion won ($283 million) in emergency liquidity for suppliers.

Vice Minister of Economy and Finance Lee Hyeong-il convened an interagency task-force meeting on Homeplus at the Government Seoul Building on Thursday, reviewing the fallout from the termination of the rehabilitation proceedings and finalizing support measures for workers and suppliers.

The Seoul Bankruptcy Court earlier decided to terminate the rehabilitation proceedings Homeplus had applied for. However, if Homeplus secures funding and files an immediate appeal within 14 days, the proceedings could resume.

The government said its first priority is protecting workers. Employees owed back pay will be eligible for unpaid wage advances of up to 21 million won per person, along with livelihood loans of up to 10 million won — capped within the amount of unpaid wages — at an annual interest rate of 1.5 percent.

Low-income workers still employed but earning at or below 50 percent of the median income will be able to borrow up to 20 million won in livelihood stabilization loans at the same 1.5 percent annual rate.

Laid-off workers will have access to unemployment benefits, reemployment programs and tailored job-placement services. Those who do not meet the eligibility requirements for unemployment benefits can receive job-search planning and placement support through the national employment support system. Low-income job seekers will also receive a job-search allowance of 600,000 won to 1 million won per month. Workers who enroll in vocational training can borrow up to 10 million won in training livelihood loans at an annual rate of 1.0 percent.

Small and medium-sized suppliers that counted Homeplus as a major client will receive a total of 440 billion won in emergency liquidity — comprising 90 billion won in emergency business stabilization funds from the Korea Federation of Small and Medium Business and the Korea SMEs and Startups Agency, and 350 billion won in special guarantees from the Korea Credit Guarantee Fund and the Korea Technology Finance Corporation.

The loan ceiling for small business owners will rise from 70 million won to 100 million won, and interest rates will be cut by 0.5 percentage points. Eligibility for emergency business stabilization funds will also be broadened for small and medium-sized enterprises, with the requirement that sales or operating profit have fallen by at least 10 percent waived. The government will also work with banks to allow businesses that have already received repayment deferrals or loan extensions to obtain further extensions.

Suppliers wishing to close will receive one-stop closure support covering store dismantling costs and legal advice, while job-change incentives and allowances linked to the national employment support system will be available for those seeking new employment or looking to start a new business.

The government plans to hold weekly interagency task-force meetings to monitor the progress of support measures and draw up additional assistance if needed. It will also pursue measures to minimize the economic damage to local communities from Homeplus store closures and to strengthen the competitiveness of the retail industry.