MBK chair avoids arrest warrant
Private equity giant MBK Partners avoided a worst-case scenario Tuesday, after a court rejected prosecutors' request for arrest warrants for key executives over the Homeplus fallout, including founder and Chair Michael Byung-ju Kim.
The Seoul Central District Court said it denied the warrants sought for Kim; Homeplus CEO and MBK Vice Chair Kim Kwang-il; MBK Vice President Kim Jeong-hwan; and Homeplus Chief Financial Officer Lee Sung-jin, citing insufficient grounds to justify detention.
"While the consequences of the Homeplus incident are serious, the materials submitted were insufficient to establish the necessity of detention," the court said, following a more than 13-hour review hearing.
"The need to allow the suspects sufficient opportunity to mount a full defense while not in custody outweighs concerns over potential evidence tampering or flight risk," it added.
Prosecutors last week sought arrest warrants for Kim and other MBK senior executives, including a co-chief executive of Homeplus, on charges of misleading investors in the troubled grocery retailer.
The executives are alleged to have pushed ahead with the issuance of 116.4 billion won ($79 million) in debt instruments — including short-term bonds and commercial paper — despite being aware that Homeplus was facing an imminent credit rating downgrade. Shortly after the downgrade, the retailer applied for court-led restructuring to avert bankruptcy.
Aside from Kim, other executives allegations of accounting fraud and manipulation of audit reports related to Homeplus' management.
Amid the ongoing legal proceedings, Homeplus — once one of the country's leading hypermarket chains — has yet to make progress in finding a new owner.
As part of sweeping cost-cutting measures, the retailer has been closing leased stores nationwide. In December, Homeplus proposed carving out and selling its smaller-format supermarket unit, Homeplus Express, widely regarded as its most valuable business segment.
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