'Cash only'
At a food service counter in the Homeplus World Cup store in Seongsan-dong, Seoul, a handwritten notice stated that only cash payments were accepted. The store operator, identified as A, explained, "If customers pay by credit card, Homeplus does not settle the payments, so we have no choice but to accept only cash or bank transfers." Other vendors in the store also reported a chaotic atmosphere, with two clothing retailers beginning to withdraw their operations early that morning.
As Homeplus moves toward bankruptcy following a court decision to terminate its corporate rehabilitation process, the impact on suppliers and small businesses is growing. The court's ruling has diminished the likelihood of settling debts amounting to hundreds of millions of won, raising concerns that the liquidity crisis could extend beyond suppliers to subcontractors.
According to Homeplus and industry sources, 47% of the 4,603 suppliers and partners that do business with Homeplus rely on the retailer for more than half of their total sales. A survey by the Korea Federation of Small and Medium Enterprises found that the average unpaid amount for 150 small businesses is approximately 770 million won per company, with 24% of these businesses having unpaid amounts exceeding 1 billion won.
If Homeplus ultimately declares bankruptcy, companies without collateral or priority claims are likely to face significant challenges in recovering their payments. As of last month, the outstanding payments owed to suppliers in the agricultural, fruit, livestock, and processed food sectors were estimated to be around 200 billion won. Industry experts believe that the total amount of unpaid debts, including other categories, is likely much higher.
The government has initiated emergency support measures to prevent further damage. A total of 440 billion won in liquidity will be provided to small businesses and medium-sized enterprises that primarily deal with Homeplus. The Small Enterprise and Market Service and the Korea Venture Business Association will offer 90 billion won in emergency management stabilization funds, while 350 billion won will be allocated through special guarantees from the Korea Credit Guarantee Fund and the Technology Guarantee Fund.
However, suppliers argue that financial support alone will not resolve the underlying issues. They stress that the urgent need is for Homeplus to stabilize its operations rather than relying on loan policies.
B, a representative of a clothing company that relies on Homeplus for 80% of its sales, stated, "Government support is just another form of debt, and how long can we endure this? Even if support is provided, it will only be a temporary fix." He emphasized that to maintain their businesses and pay overdue amounts to subcontractors, the remaining 67 Homeplus locations must operate normally and settle accounts properly. According to a survey by the Korea Federation of Small and Medium Enterprises, 85.3% of Homeplus suppliers are unable to pay for raw materials and subcontracting costs on time due to the current crisis.
Suppliers are also calling for decisive action from the major shareholder, MBK Partners, and the creditor representative, Meritz Financial Group. On July 1, 182 Homeplus suppliers issued a statement warning that if Homeplus goes bankrupt, hundreds of small partners will also collapse, resulting in thousands of employees losing their jobs. They urged the government to provide active support and called on Meritz to offer immediate emergency operating funds.
Earlier, the Seoul Bankruptcy Court decided on July 3 to terminate Homeplus's corporate rehabilitation process but left the door open for potential recovery. The court stated that if Homeplus successfully secures 200 billion won in new funding within the 14-day appeal period, the rehabilitation process could be reinstated.
* This article has been translated by AI.
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