Homeplus clears key hurdle as court approves rehabilitation plan

A court has given final approval to Homeplus' corporate rehabilitation plan, about a year and a half after the retailer filed for court receivership in March last year.

The Seoul Bankruptcy Court's Fourth Rehabilitation Division, presided over by Chief Judge Jeong Jun-yeong, approved the plan immediately after creditors voted to pass it at a stakeholders' meeting Wednesday afternoon. The approval means the court has authorized Homeplus to repay its debts in accordance with the rehabilitation plan.

Contrary to some expectations that the meeting would run long, the court reached its decision just over two hours after the proceedings began.

In the vote, secured creditors and shareholders each backed the plan with 100 percent approval within their respective groups. The unsecured creditors' group approved the plan at a rate of 75.90 percent. The thresholds required for passage were 75 percent for secured creditors, 66.7 percent for unsecured creditors and 50 percent for shareholders.

Ahead of the meeting, Homeplus had asked public-interest creditors — including suppliers and current and former employees — to agree to installment repayment.

After announcing the tally, the presiding judge said the court recognized that the conditions for approving the rehabilitation plan had been met, noting that more than two-thirds of public-interest creditors had given their consent. The judge added that the debtor company should work closely with its employees and business partners to make every effort to carry out the plan faithfully.

Kim Gwang-il, vice chairman of MBK Partners, who attended the meeting as administrator, offered a deep apology to creditors harmed by Homeplus' financial difficulties. He said the core of the rehabilitation plan was to restore profitability by scaling back operations to focus on profitable stores, while immediately selling some locations and using the proceeds primarily to repay creditors.

Once repayment begins as outlined in the plan, the rehabilitation proceedings will be closed. If repayment falls short of the plan's targets, the court will issue a post-approval cancellation order and declare bankruptcy on its own authority.