Homeplus, described by the Korea Times as once the second-largest discount chain in South Korea, has formally appealed against the decision to halt its restructuring process. The initiative was deposited within the deadline period and aims to obtain the revocation of the decision, allowing the society to resume its path towards restructuring instead of liquidation. A decisive moment arrived on July 16 when Meritz Financial Group approved a debtor-in-possession loan worth 200 billion won.

This form of credit is intended for businesses continuing their activity during a restructuring procedure. According to the daily Korean newspaper, MBK Partners, owner of Homeplus, and private equity group president Michael ByungJu Kim have provided personal guarantees covering the entire value of the loan. The Seul bankruptcy court had disposed on July 3 to conclude the restructuring process.

However, this provision left room for review: Homeplus could have obtained the reopening of the proceedings obtaining, prior to the expiration date set for the appeal, the minimum resources necessary for the implementation of the recovery plan. The granted funds do not however mean an automatic resumption of the process. Homeplus must first convince the tribunal to be able to continue operating and to have sufficient prospects to sustain the restructuring.

Observers from the sector cited by the source estimate that the decision regarding possible revocation of stop may still require another or two weeks. Even a favorable pronouncement would not alone resolve the financial crisis. The Korea Times reports that a substantial part of the loan should be used to settle administrative credits, which are given priority according to the corean law on restructuring.

These include delayed salaries, severance pay and unpaid invoices for goods supplied after Homeplus entered into its restructuring process. The prioritization of one quarter of new resources reduces therefore the usable money available to finance current activities. The loan offers coverage in emergency situations and strengthens the society's position before the tribunal, but according to the source might not suffice to bring back accounts on stable basis.

Homeplus will need to obtain additional liquidity while facing simultaneously laborer, supplier and other creditors with precedence rights. The relationship with suppliers constitutes one of the main knots. After months of difficulties and interruptions, the chain needs to re-establish trust among supply businesses supplying its points-of-sale.

Payment of arretrated bills represents initial step, but continuity of deliveries depends also upon ability of Homeplus to demonstrate it can respect future obligations. Without regular flow of products, commercial recovery risks remaining incomplete. To the question of supplies is added that of client base.

According to the Korea Times, Homeplus must regain consumers who have been away from months of service disruptions and restore activity of shops towards normal conditions. Liquid funds, availability of merchandise and influx of clients are problems linked: weakness in any of these areas may limit effectiveness of interventions in others. New financing faces urgent need, however does not eliminate operational obstacles.

Guarantees provided by MBK Partners and Michael ByungJu Kim have made possible the last-minute loan and have moved away, according to the source, immediate prospects of liquidation. Their intervention does not clarify whether 200 billion won worth loan would be sufficient to sustain entire restructuring plan, especially after payment prioritarie. Ability of property owner to contribute still to rilancio is indicated nowhere in available information.

I next developments depend on valuation of Seul bankruptcy court on continuation of society and solidity of presented plan by Homeplus. If appeal will be accepted, society should utilize resources available for dealing with urgent debts without compromising management routine. Remain definitions of outcome of impugnatio, actual amount effictively destinable to operations and possibility obtaining new finanza, rebuilding furnishes and recovering clients.