TMON and Homeplus are currently undergoing corporate rehabilitation procedures. /Courtesy of News1

This article was published on June 23, 2025, at 5:12 p.m. on the ChosunBiz MoneyMove site.

Expectations for the corporate rehabilitation process of Home Plus have risen. This comes as the court has issued a compulsory approval decision on the rehabilitation plan of TMON, currently under court protection. Both companies are on the same path, with their 'value as a going concern' being lower than their 'liquidation value' and pursuing mergers and acquisitions (M&A) before the approval of their rehabilitation plans.

Initially, TMON's trade creditors opposed the proposed repayment rate of 0.7% and cast votes against it. In principle, if the rehabilitation plan is rejected, it will transition to bankruptcy proceedings, leaving only the option of liquidation. However, with the recent compulsory approval decision, there are expectations that Home Plus can maintain its rehabilitation process smoothly. Under the 'greater good' of corporate rehabilitation, Home Plus creditors may find themselves in a position to absorb greater losses.

According to the investment banking (IB) industry and the legal community on the 23rd, Home Plus has selected Samil as the sale supervisor and has begun seeking a new owner. The process will be conducted in a stalking horse manner, finding potential acquirers through a negotiated contract and then looking for bidders through public auctions. Since this will proceed through methods such as third-party assigned capital increases, all sale proceeds will flow into the corporation.

◇ Trade creditor repayment rate 0.7%... The court has issued a compulsory approval decision.

Before Home Plus, the same method was employed for corporate rehabilitation at TMON. According to TMON's report, the liquidation value is 13.6 billion won, while the going concern value is negative 92.5 billion won. The liquidation value exceeds the going concern value by approximately 100 billion won, thus the rehabilitation plan should be revoked in principle. However, they opted to maintain the rehabilitation process while seeking a new owner before the rehabilitation plan was approved.

TMON ultimately designated OA as the acquirer and created a rehabilitation plan based on a sale amount of 11.6 billion won. The actual amount used for repaying rehabilitation secured creditors and rehabilitation creditors is around 10.2 billion won. This excludes fees of 259.2 million won for weekly management, 100.32 million won for special management compensation, and 160 million won reserved for uncertain claims.

However, at the meeting of related parties held on the 20th, the rehabilitation plan was rejected. While they received 100% approval from the secured creditor group and 82.16% from the general rehabilitation creditor group, they could only gain 43.48% approval from the trade, small business, and consumer rehabilitation creditor group. To pass the rehabilitation plan, more than three-quarters of the secured creditor group and two-thirds of the rehabilitation creditor group must agree.

The reason TMON failed to gain approval from the trade, small business, and consumer rehabilitation creditor group is due to the repayment rate. TMON's plan indicated that it would convert 73.99 billion won (99.2438%) of the 74.56 billion won in trade claims to equity and repay only 560 million won (0.7562%) in cash. Essentially, this means that most of the money would not be returned. Before the meeting, TMON attempted to persuade creditors by presenting the potential for future contingent benefits but ultimately failed.

However, the situation changed when the court decided to issue a compulsory approval for TMON’s rehabilitation plan. The court explained, "It concluded that approving the rehabilitation plan aligns with the interests of the rehabilitation secured creditors, rehabilitation creditors, employees, and all other stakeholders."

◇ The likelihood of Home Plus's rehabilitation plan passing is increasing... However, a buyer must appear.

A green light has been shown regarding whether Home Plus's rehabilitation plan will pass. Even if Home Plus presents a repayment rate in the zero percent range, if it receives approval from either the secured creditor group or the rehabilitation creditor group, it can receive a compulsory approval decision similar to TMON. In fact, last year, the court issued a compulsory approval decision on the rehabilitation plan for the construction company HN & C and the mid-sized construction company Daechang.

Even if the sale amount for Home Plus is determined to be around 1 trillion won, it can still receive compulsory approval. This is because the principle of guaranteed liquidation value under the Debtor Rehabilitation Act is the amount of the going concern value plus the sale price. Consequently, adding Home Plus's going concern value of 2.5 trillion won to the sale amount of 1.2 trillion won reaches a liquidation value of 3.7 trillion won, thus meeting the conditions for approving the rehabilitation plan.

This is the background behind claims that the sale of Home Plus could proceed below the liquidation value. Given that the domestic offline retail industry is currently in recession and it is difficult to find buyers capable of paying nearly 4 trillion won, this claim is considered realistic. A lawyer who previously served as the director general in a rehabilitation court stated, "If a corporation with a liquidation value of 2 billion won and a going concern value of 1 billion won is sold for 1 billion won, it is upholding the principle of guaranteeing liquidation value," explaining why a compulsory approval decision can still arise even with a very low repayment rate.

Extremely, if Home Plus guarantees the repayment rate only for the three companies of Meritz Financial Group, which holds the majority equity in the secured creditor group, the rehabilitation plan could pass. An industry insider remarked, "If approval is secured from one group among the secured creditor group and the rehabilitation creditor group, the court can issue a compulsory approval decision at its discretion, even if the remaining group opposes it," adding that "considering the repercussions from the liquidation of Home Plus, the possibility of compulsory approval is quite high."

Of course, this is all contingent on the premise that a buyer appears. Opinion in the industry is skeptical about the potential for a buyer to emerge. Since most of the liquidation value exceeding 3 trillion won consists of owned real estate, it is not out of the question that a prospective buyer who intends to use offline stores might appear. However, the requirement to ensure the employment succession of tens of thousands of Home Plus employees complicates the situation. Ultimately, it is expected that the narrowing candidate pool will make it difficult to sell to a strategic investor (SI) after developing the Home Plus stores into mixed-use sites.