Seoul court approves rehabilitation plan for Homeplus

A Seoul court on Wednesday approved a rehabilitation plan for financially troubled discount store chain Homeplus Co., after creditors and other related parties voted in favor of the proposal.

The Seoul Bankruptcy Court approved the plan immediately after creditors and shareholders voted in favor of it during a meeting earlier in the day.

"The key to the rehabilitation plan is securing profitability by scaling down its business to focus on profitable stores, while immediately selling some stores to use the proceeds primarily to repay creditors," MBK Partners Vice Chairman Kim Kwang-il said.

With the approval, Homeplus will begin repaying its debts in accordance with the rehabilitation plan.

The court plans to terminate the rehabilitation proceedings once the company begins making repayments.

In March last year, the retailer, wholly owned by private equity firm MBK Partners, filed for corporate rehabilitation after its credit rating declined amid liquidity concerns. The company later submitted a rehabilitation plan to the bankruptcy court.

The distressed retailer temporarily closed its outlets starting July 13 due to a lack of operating capital and difficulties in maintaining store operations.