Homeplus filed an immediate appeal on the 20th against a court's rehabilitation procedure termination decision after securing 200 billion won in emergency operating funds, prompting creditor banks to accelerate response preparations on the 21st. The creditor group, which provided financing to Homeplus leased stores through funds and real estate investment trusts, completed lead bank designation for each business location. The Financial Supervisory Service proposed forming a creditor council for business restructuring at industry meetings held early this month, while fund loan maturities begin next month, requiring creditors to determine asset classification regardless of rehabilitation procedure status.
Creditor Banks Complete Lead Bank Designation for Business Locations
Creditor banks completed lead bank designation for each Homeplus leased store business location on the 21st, according to financial sector sources. Financial institutions that supplied funds to Homeplus through funds and REITs will form councils centered on business location lead banks to review store-by-store conditions, debt recovery prospects, and support measures including maturity extensions and deferred interest payments. This structure is expected to remain in place even if rehabilitation procedures resume.
The creditor group has not yet finalized a voluntary agreement separate from lead bank appointments. The Financial Supervisory Service held industry meetings early this month to review Homeplus leased store exposure and propose creditor council formation for business restructuring. The voluntary agreement draft reportedly includes provisions requiring unanimous creditor consent for individual financial institutions to execute collateral rights or sell claims to third parties, referencing the 2023 real estate project financing creditor agreement structure.
A Financial Supervisory Service official stated the agency has no plans for additional meetings, noting court judgment remains critical and the situation is rapidly changing. A banking sector official noted the voluntary agreement's original purpose was for creditors to autonomously restructure business locations in case of bankruptcy, separate from rehabilitation procedures, though the agreement could support business rehabilitation depending on how the rehabilitation plan is structured.
Financial Supervisory Service Proposes Voluntary Creditor Agreement Framework
The voluntary agreement framework proposed by the Financial Supervisory Service at early-month meetings references the 2023 real estate project financing creditor agreement structure. Under this framework, individual financial institutions would require unanimous creditor consent to independently execute collateral rights or sell claims to third parties. If activated, the agreement would enable maturity extensions without repeating individual financial institution consent procedures.
Some Homeplus leased store-related funds face loan maturities starting next month. Creditor banks plan to monitor developments and determine response measures given upcoming court judgment and near-term maturity dates. A banking sector official noted that while the voluntary agreement was originally conceived for bankruptcy scenarios separate from rehabilitation procedures, it could be established to support business rehabilitation or become unnecessary depending on rehabilitation plan structure.
A Financial Supervisory Service official stated the agency will not provide additional guidance, emphasizing that court judgment is critical and each institution will independently determine provisioning needs.
Card Issuers Recognize Losses on Homeplus Exposure
Lotte Card set aside provisions covering its entire 79.3 billion won in uncollected claims from Homeplus, allocating 20.4 billion won to loan-loss reserves and 58.9 billion won to loan-loss provisions. The card issuer may reclassify provisions from reserves to allowances if recovery timing is further delayed, with potential reversal upon collection.
Card issuers suspended Homeplus purchase-only card transactions immediately after the company's rehabilitation filing and recently halted or reduced co-branded card issuance. A Lotte Card official stated related claims were classified as doubtful when Homeplus filed for corporate rehabilitation and were reclassified to estimated loss as procedures extended, with full provisioning now in place.
Savings banks, which hold predominantly subordinated exposure, may recognize losses earlier than commercial banks due to potential principal loss if residual assets prove insufficient after senior claim repayment. A savings bank industry official noted that rehabilitation procedure entry triggers substandard-or-below classification, requiring provisioning in the second quarter at earliest or third quarter regardless of whether procedures resume, unless operations normalize to pre-rehabilitation levels.
FAQ
What did Homeplus do on the 20th regarding the court decision?
Homeplus filed an immediate appeal on the 20th against a court's rehabilitation procedure termination decision after securing 200 billion won in emergency operating funds.
What framework did the Financial Supervisory Service propose for creditor coordination?
The Financial Supervisory Service proposed a voluntary creditor agreement at industry meetings held early this month, referencing the 2023 real estate project financing creditor agreement structure that requires unanimous creditor consent for individual collateral execution or claim sales.
How much exposure does Lotte Card have to Homeplus and what provisions were made?
Lotte Card holds 79.3 billion won in uncollected claims from Homeplus, with 20.4 billion won allocated to loan-loss reserves and 58.9 billion won to loan-loss provisions, covering the entire exposure.
