MBK chief Michael ByungJu Kim avoids arrest, but legal proceedings remain

The chairman of private equity firm MBK Partners, Michael ByungJu Kim, and several executives were arrested on Tuesday on charges of fraud and violation of the Capital Markets Act in relation to Homeplus.

Michael ByungJu Kim, chairman of MBK Partners, arrives at the Seoul Central District Court in Seocho District, southern Seoul, on Jan. 13 for a pretrial detention hearing. [YONHAP]

A Seoul court rejected a request for an arrest warrant for MBK Partners Chairman Michael ByungJu Kim and several executives of the private equity firm on Wednesday, following a record-long hearing on charges of fraud and violations of the Capital Markets Act related to the sale of Homeplus bonds.

With the arrest warrant request rejected, Kim avoided the worst-case scenario, although he still must contend with the ongoing investigation.

Kim and three MBK Partners executives — MBK Vice Chairman and Homeplus CEO Kim Kwang-il, MBK Vice President Kim Jeong-hwan and Homeplus CFO Lee Sung-jin — were released 13 hours and 40 minutes after appearing at a Seoul court on Tuesday.

Senior Judge Park Jung-ho, who ruled on the decision, cited a lack of grounds for an arrest.

"It is clear that the damage and consequences of the case are grave, but the materials submitted so far do not provide enough basis for the charges to justify detention,” the judge said, adding that the court will ensure the suspect's rights to defense without being detained.

Kim Byung-ju, chairman of private equity firm MBK Partners, attends an audit by the National Assembly's National Policy Committee on Oct. 14, 2025. [YONHAP]

MBK welcomed the decision, adding that the prosecutors "misinterpreted" the company.

"We respect and appreciate the court’s prudent decision to dismiss the arrest warrants," the private equity firm said in a statement. "The prosecution has misinterpreted the efforts undertaken by MBK Partners and Homeplus to restore the company through the rehabilitation process." Prosecutors sought an arrest warrant for Kim on fraud charges for issuing bonds around the time Homeplus’s credit rating was downgraded without disclosing the potential risk. It allegedly issued around 116.4 billion won ($79 million) in bonds just before the rating was lowered, according to local media reports.

After analyzing internal MBK documents, prosecutors concluded that MBK and Homeplus were aware of the impending downgrade and identified circumstances indicating that they began preparing for corporate rehabilitation as early as 2023.

Credit rating agencies, including Korea Investors Service and Korea Ratings, downgraded the company's rating to A3- from A3 on Feb. 28. Four days later, it filed for court-led rehabilitation.

The executives, excluding Kim, were charged with accounting fraud worth approximately 1 trillion won, for improperly treating debt as equity in violation of accounting rules and inflating the valuation of property assets.

MBK Partners acquired full ownership of Homeplus in 2015 from British retailer Tesco for 7.2 trillion won. The retail chain faced financial struggles amid a downturn in the supermarket industry, driven by increased competition from e-commerce operators.

Kim was named the wealthiest individual in Korea by Forbes, although he holds U.S. citizenship.

With a reputation as a trailblazer and leader in the Asian private equity market, Kim worked at Goldman Sachs and Salomon Smith Barney, and was the head of Carlyle Asia before founding MBK Partners in 2005.

BY JIN MIN-JI, PARK EUN-JEE [jin.minji@joongang.co.kr]