Financially troubled discount store chain Homeplus has announced the temporary closure of its outlets, starting Monday. This decision stems from a lack of operating capital and challenges in maintaining store operations. The Seoul Bankruptcy Court ended Homeplus’ rehabilitation proceedings on July 3, citing the company’s failure to secure the required 200 billion won for its self-rescue plan.
The retailer, owned by private equity firm MBK Partners, has faced financial strain due to a prolonged downturn in the discount store sector. Homeplus sought a 200 billion won working capital loan from its major creditor, Meritz Financial Group, which is yet to be approved. As a result, the company is unable to meet payments to suppliers or cover essential operating expenses.
In response to the financial constraints, Homeplus will suspend operations at both its headquarters and all discount stores starting Monday. This measure aims to ensure security and safety until the financial situation improves. MBK Partners acquired Homeplus from British retailer Tesco Plc in 2015 for 7.2 trillion won.
The government has been monitoring the situation closely and reviewing support measures for affected workers of Homeplus. First Vice Finance Minister Lee Hyoung-il led a task force meeting to assess the progress in implementing support measures, including substitute payments for unpaid wages. The labor ministry received 692 inquiries and provided information on available support programs, with a focus on addressing the 33.3 billion won in unpaid wages for June.
South Korea has also extended assistance in the form of low-interest loans of up to 10 million won at a rate of 1.5 percent to help workers cover their unpaid salaries.
