Arrest warrant request for MBK chief derails rehabilitation effort: Homeplus

(Lee Seung-hwan)

South Korean retailer Homeplus Co. expressed concern on Thursday over prosecutors’ request for arrest warrants against MBK Partners Chairman Kim Byung-ju and other senior executives, saying the move “places even the company’s last opportunity at risk.”

In a statement released on Thursday, Homeplus said that it filed for court rehabilitation as an unavoidable measure to prevent default after an unexpected credit rating downgrade made it virtually impossible to secure working capital through existing financial markets.

Homeplus and its shareholder MBK Partners maintain that they did not foresee the credit rating downgrade in advance and that the rehabilitation process was not prearranged.

Regarding the asset-backed short-term bills (ABSTB) at issue, Homeplus said that “the ABSTB cited by prosecutors were financial products independently issued and sold by Shinyoung Securities following a separate credit evaluation.

“We were not involved in the issuance or resale of ABSTB in any manner,” it said.

Homeplus emphasized that it is currently facing “extreme liquidity shortages to the extent that even the normal payment of employee wages and social insurance contributions is difficult – truly standing at a crossroads for survival.”

The company added that since the commencement of rehabilitation proceedings, the current administrator has led consultations with all relevant institutions and stakeholders, including the court, creditors, the government, and political circles.

It warned that “requests for arrest warrants against these individuals would inevitably lead to disruption and confusion across the entire rehabilitation process.”

On Wednesday, the Seoul Central District Prosecutor‘s Office requested arrest warrants for four individuals – Chairman Kim,

Vice Chairman and Homeplus Co-CEO Kim Kwang-il, and two other senior officials – on charges including fraud under the Act on the Aggravated Punishment of Specific Economic Crimes and violations of the Capital Markets Act.