Wages in arrears, electricity cut off... Homeplus union on the brink requests "injection of public funds"

As Homeplus's financial difficulties deepen, a sense of crisis is spreading that the company has been pushed to the brink. Three months after reopening in mid-August, operating costs have run out, leaving employee wages several months in arrears, and it is known that some stores are scheduled for power cuts due to unpaid utility bills. Additional store closures, and in the worst case, a declaration of self-bankruptcy, cannot be ruled out.

According to industry sources on the 10th, Homeplus has yet to pay 50% of its August salaries this year. Although it paid 50% of wages in two installments on the 23rd of last month and the 6th of this month, the timing for paying the remaining wages is uncertain. There is also a high possibility that September and October wages will be delayed.

Homeplus implemented voluntary retirement last month, with approximately 400 employees applying, but it was fully withdrawn midway. This was because the company failed to secure funds to pay the remaining wages and severance promised to those who applied for voluntary retirement. Previously, some stores that ended operations had unpaid electricity bills of approximately 10 billion won and received power cut warnings from Korea Electric Power Corporation.

Homeplus employees, who once numbered over 19,000, have now decreased by more than half to around 9,000. This is the result of increased suspensions and resignations due to financial difficulties, combined with the sale of Homeplus Express stores. The Homeplus union claims that the "employment crisis" most feared by the government and political circles has already become reality.

Homeplus achieved brief success for about two weeks immediately after reopening, but failed to normalize product supply, resulting in recent sales being known to be below 30% of target sales. While employee wages alone require funds in the range of 23 billion won per month, at current sales levels, it is difficult to even cover labor costs of 10 billion won per month. If the situation does not improve, this means that more than 50% of salaries will be unpaid each month going forward. An industry official said, "Unpaid wages alone are accumulating over 10 billion won per month, making it difficult to manage unless additional operating funds are secured."

The union states that the company is facing its greatest crisis on the verge of bankruptcy and urges direct government support. At a press conference held at the National Assembly on the 3rd, the union stated, "Homeplus sales have plummeted to a level where normal rehabilitation is difficult to expect," adding, "Workers' livelihoods are threatened, and if an acquirer does not appear immediately, it will be difficult to avoid the worst-case scenario of all stores closing again."

It further urged, "The government must take responsible mediation and support measures alongside promoting private acquisition," and "Prepare a substantive rehabilitation plan, including securing emergency operating funds, so that Homeplus can continue its operations."

The government announced a support package worth approximately 550 billion won in July last year when the risk of Homeplus bankruptcy intensified. However, this is an indirect support method, such as low-interest loans for living expenses for retirees, rather than direct support for company operating costs. The union demands that this be converted into direct operating cost support, but the government shows reluctance. It is widely believed in the industry that the likelihood of this being realized is low, as it is a method with few precedents.

The M&A process, the final card for Homeplus's rehabilitation, is also facing difficulties. The sale agent originally planned to close applications from potential acquirers by the end of October, but after failing to attract interest, decided not to set a separate deadline. It is known that they are currently inquiring about acquisition intentions with some companies, but there have been no clear results. In the industry, the large scale of Homeplus's contingent liabilities and the fact that a strong union limits the acquirer's restructuring capacity are cited as the biggest obstacles to the M&A.