Homeplus, once one of South Korea’s dominant supermarket chains, is preparing to shrink to nearly half its former size as a court deadline for emergency funding threatens to decide whether the retailer survives or heads toward liquidation.
The company, controlled by MBK Partners, South Korea’s largest private equity firm, has submitted a revised rehabilitation plan to the Seoul Bankruptcy Court after months of store closures, asset sales and labor cuts. The proposal would leave Homeplus with 67 core hypermarkets, down from 126, and reduce its workforce by roughly 50%.
The restructuring marks one of the sharpest contractions in South Korea’s offline retail industry, where big-box chains have struggled with weaker consumer spending, online competition and high fixed costs. It has also turned Homeplus into a test case for how far South Korean courts and creditors can push a private equity owner to support a distressed portfolio company.
Homeplus said the downsizing has improved its cost structure and could allow the company to return to annual operating profit of about $50 million if product supply and store operations normalize. The retailer said its costs have fallen by about $7 billion compared with levels before it entered court-led rehabilitation.
But the revised plan does not yet include the financing that may matter most. The court has ordered Homeplus to submit a plan by 5 p.m. on June 30 to secure $130 million in emergency operating funds. The court is expected to decide by July 3 whether the company can continue its rehabilitation process.
The funding dispute has centered on Meritz Financial Group, a major South Korean financial-services company and Homeplus’ largest creditor. Meritz has said it would provide only $65 million, and only if MBK Partners Chairman Kim Byung-joo and other MBK executives offer joint personal guarantees.
Meritz’s position reflects a broader concern among creditors that new financing could expose them to shareholder-value losses or legal risks unless stronger safeguards are in place. For MBK, the demand raises a different question: how much responsibility a private equity owner should bear after a major retailer under its control runs out of cash.
Homeplus entered court receivership in March last year after three consecutive years of heavy operating losses beginning in 2021. The company and MBK previously submitted a restructuring plan built around the sale of Homeplus Express, its smaller supermarket chain, the closure of weak stores and the raising of emergency funds.
Homeplus has since sold Homeplus Express to Harim Group, a South Korean food and agribusiness conglomerate, for $77 million and suspended operations at 37 stores. A later revision called for those suspended stores to be closed permanently.
The case carries significance beyond one troubled retailer. In the U.S., private equity ownership has faced scrutiny after a series of retail bankruptcies, including chains weakened by debt, changing shopping habits and competition from e-commerce. South Korea is now facing a similar debate, but within its own corporate-restructuring system, where courts, creditors, labor groups and controlling shareholders are being forced to decide who absorbs the cost of saving a major employer.
If Homeplus fails to secure the full $130 million in emergency funding, the court could reject the revised plan and move the company toward liquidation. That would deepen pressure on MBK, disrupt suppliers and employees, and mark a major setback for one of South Korea’s best-known retail brands.
For now, Homeplus has made its argument that a smaller company can survive. The court’s next question is whether anyone is willing to fund it.
