‘Funds Depleted’ Homeplus Faces Shutdown Crisis at 67 Stores... Pleads with Meritz for Emergency Loan

Wage Delays Threaten Employees for April and May
Stalemate in Negotiations Amid Breach of Trust Concerns

Homeplus, which is facing a crisis of collapse due to the depletion of operating funds, has once again appealed to Meritz Financial Group—their only remaining funding source—for an emergency resource loan, urging them to make a decisive move.

Yonhap News Agency

According to the retail industry on May 17, Homeplus released a statement that day, saying, "Currently, Meritz Financial has tied up most of the company's major assets under collateral trusts, making it impossible for us to raise funds independently." The company added, "At this point, Meritz is the only party that can prevent disaster and inject emergency operating funds."

37 out of 104 Stores Temporarily Closed... Facing Consecutive Wage Delays in April and May

As part of its recent corporate restructuring, Homeplus sold off its profitable supermarket division (Homeplus Express). However, unable to overcome its financial difficulties, the company was forced to temporarily suspend operations at 37 out of its 104 hypermarkets on May 10. While barely sustaining operations with the remaining 67 stores, even this is reaching its limits due to exhausted funds. Internally, the company has already failed to pay salaries for April, and it is highly likely that the salaries due on May 21 will also be delayed.

Homeplus is requesting that Meritz provide a 'bridge loan' to tide the company over until the proceeds from the Express sale are received, or a 'DIP (Debtor-in-Possession) loan' to support restructuring until the completion of corporate rehabilitation. In this case, Meritz, as the holder of senior collateral, would be able to recover its claims in full. However, Homeplus warned that this could trigger massive social repercussions, including large-scale job losses and a domino effect of bankruptcies among suppliers and in-store vendors, and urged Meritz to make an 'inclusive financial' decision.

Meritz: "Major Shareholder MBK Must Provide Reasonable Guarantees"

On the other hand, Meritz Financial maintains that it does not flatly refuse to provide financial support, but that it is difficult to extend loans without at least minimum legal safeguards in place, as the management could be accused of breach of trust by shareholders if losses are incurred by lending to a company with an uncertain future.

To alleviate Meritz's concerns about breach of trust, Homeplus proposed offering a pledge on the subordinated beneficiary rights of the trust properties. However, Meritz deemed this ineffective and rejected the proposal, causing negotiations to remain at a stalemate. Meanwhile, the Homeplus General Labor Union has voluntarily taken the extreme step of 'giving up and deferring wages,' and has made tearful pleas to suppliers, saying, "The stores must survive for you to be paid in full, so please do not stop supplying goods," as part of their desperate efforts to revive the company.

This content was produced with the assistance of AI translation services.