South Korean discount store chain Homeplus announced on Monday, 13 July that it is temporarily closing all its outlets with immediate effect, citing a complete exhaustion of operating funds and an inability to pay suppliers or meet day-to-day store expenses. The shutdown follows the Seoul Bankruptcy Court's decision on 3 July to terminate the company's rehabilitation proceedings after it failed to secure the minimum 200 billion won (approximately US$130 million) required to execute its self-rescue plan.

Why the Stores Are Closing

'Most of our operating funds have been completely exhausted, leaving us unable to make payments to suppliers or cover operating expenses needed to keep our stores open,' a company official said. The official confirmed that both Homeplus' headquarters and all discount store locations will suspend operations until circumstances change, with security and safety cited as the primary reasons for the immediate halt.

The retailer had approached its largest creditor, Meritz Financial Group, for a 200 billion-won working capital loan to stay afloat, but that request has not been accepted. Without that lifeline, the chain had no viable path to continue operations.

The Road to Collapse

Homeplus, wholly owned by private equity firm MBK Partners, entered court-led rehabilitation proceedings in March 2025 after a prolonged slump in South Korea's discount retail sector eroded its financial position. MBK Partners had acquired a 100 percent stake in Homeplus from British retailer Tesco Plc in 2015 for 7.2 trillion won — a deal that saddled the chain with significant debt at a time when the discount store model was already under structural pressure from e-commerce and changing consumer habits.

Notably, the court's termination of rehabilitation proceedings on 3 July effectively removed the last legal framework protecting the company from creditors, leaving a full shutdown as the only immediate outcome.

Government Response and Worker Support

The South Korean government has moved quickly to cushion the blow for affected workers and subcontractors. First Vice Finance Minister Lee Hyoung-il chaired a task force meeting to review the rollout of support measures, including substitute payments of up to 21 million won (approximately US$13,980) for unpaid wages.

The labour ministry reported receiving 692 inquiries from workers seeking information on available support programmes. The task force identified 33.3 billion won in unpaid wages for June alone and pledged to monitor any further delays. Additionally, the government is offering low-interest loans of up to 10 million won at a rate of 1.5 percent, capped at the amount of each worker's unpaid salary.

What Comes Next

With rehabilitation terminated and operating capital exhausted, the immediate priority is the resolution of outstanding liabilities to suppliers and workers. Whether a buyer or investor steps in to revive the brand remains uncertain. The Homeplus collapse underscores the deepening structural crisis in South Korea's brick-and-mortar discount retail sector, where several chains have struggled to compete against online platforms. Creditor negotiations and potential asset sales are expected to define the next phase of proceedings.