Seoul Bankruptcy Court authorizes Homeplus’ M&A deal

The recent approval by the Seoul Bankruptcy Court in South Korea for discount store chain Homeplus to pursue a merger and acquisition (M&A) deal is a significant development as the company navigates through the process of corporate rehabilitation. This strategic move aims to facilitate the repayment of creditors and ensure job security for Homeplus’ workforce during this challenging period.

With the court’s approval, Homeplus is now able to engage in selecting an M&A advisor and advancing with the deal, ensuring that all parties involved, including creditors and employees, benefit from favourable terms. The company, which initially filed for corporate rehabilitation in March 2025, is required to present its rehabilitation plan by 10 July, marking a crucial deadline in the process.

The decision to allow Homeplus to pursue an M&A deal follows the downgrade of its corporate bonds due to concerns about its financial health. To oversee the sale process, Samil PricewaterhouseCoopers, a court-appointed accountancy firm, has been recommended, with expectations that the sale will be completed within two to three months.

MBK Partners, the private equity firm that holds ownership of Homeplus, has committed to supporting the sale by writing off a substantial amount of common shares, totaling Won2.5tn ($1.83bn), as reported by Reuters. This commitment underscores MBK Partners’ dedication to ensuring the success of the sale and preserving the financial stability of Homeplus.

The court’s approval of the M&A deal emphasizes the positive outcomes it is expected to bring, such as infusing capital into the company, repaying debts, and preventing bankruptcy to safeguard partner companies. However, in the wake of Homeplus’ request for court-assisted rehabilitation, MBK Partners has come under scrutiny from regulatory bodies.

The National Tax Service has launched a tax investigation, while the Korea Fair Trade Commission is looking into potential insider trading involving MBK Partners, Homeplus, and Lotte Card, a local card issuer. Additionally, the Financial Supervisory Service (FSS) is examining MBK Partners’ involvement in the issuance of short-term bonds for Homeplus amid concerns about covert planning for court-led rehabilitation.

Overall, the approval of Homeplus’ pursuit of an M&A deal signifies a crucial step in the company’s restructuring efforts following financial challenges. By securing this approval, Homeplus is on track to repay creditors and protect the employment of its workforce, setting a positive trajectory for its future operations.