Investors file group complaint against Homeplus, MBK Partners chiefs

Home > Business > Industry

Investors file group complaint against Homeplus, MBK Partners chiefs

Published: 11 Apr. 2025, 17:15 Updated: 13 Apr. 2025, 21:31

Audio report: written by reporters, read by AI

The entrance to the Homeplus Yeongdeungpo Branch in Yeongdeungpo District, western Seoul is seen on March 4. [NEWS1]

Investors who purchased asset-backed short-term bonds (ABSTB) linked to Homeplus filed a group complaint on Friday against MBK Partners Chairman Michael ByungJu Kim and Homeplus CEO Joh Ju-yeon, accusing them of fraud in connection with the company’s recent corporate restructuring scandal.

The Homeplus Bond Investors Emergency Committee submitted the complaint to the Seoul Central District Prosecutors’ Office following a press conference in front of the courthouse.

The complaint also targets MBK Vice Chairman Kim Gwang-il and Homeplus CFO Lee Sung-jin on charges of fraud under the Act on the Aggravated Punishment of Specific Economic Crimes and violations of the Capital Markets Act.

At the heart of the scandal are allegations that MBK and Homeplus sold ABSTBs worth hundreds of billions of won to investors while secretly preparing for corporate restructuring, despite being aware that Homeplus’ credit rating was likely to be downgraded.

“The accused concealed the fact that Homeplus was preparing to file for corporate rehabilitation due to deteriorating financial soundness, a surge in debt ratios, and the parent company’s attempts to recover investments,” the committee said, according to the complaint. “They promoted ABSTBs as a stable investment product to individual investors while planning to evade repayment obligations through court receivership.”

The complaint claims that MBK Chairman Kim and Homeplus executives anticipated a downgrade to the company’s credit rating around late February this year and began preparing a court-led rehabilitation process in January. Nevertheless, Homeplus expanded its ABSTB issuance, shifting the liquidity risk onto investors.

MBK Vice Chairman Kim Kwang-il answers questions from lawmakers at a questioning regarding the Homeplus scandal at the National Assembly in Yeouido, western Seoul, on March 18. [LIM HYUN-DONG]

The committee also accused Homeplus of misleading securities firms even after learning from a credit rating agency on Feb. 25 that a downgrade was likely, insisting that the company’s creditworthiness would remain unchanged to push the ABSTB issuance through.

The company’s credit downgrade was officially announced on Feb. 28, and Homeplus applied for court receivership just two business days later, on March 4.

“It is difficult to believe that such a major decision as filing for corporate rehabilitation could have been discussed and finalized within such a short period,” the complaint said.

MBK has maintained that it only began discussing corporate rehabilitation after the downgrade was publicly disclosed.

Victims of the Homeplus ABSTB scandal hold a press conference in front of the Seoul Central District Prosecutors' Office in Seocho District, southern Seoul to file a group lawsuit against Homeplus management on April 11. [NEWS1]

“The accused used fraudulent means and omitted critical information when issuing and selling ABSTBs, misleading retail investors into purchasing them under the false impression that repayment would proceed normally,” the committee argued.

The committee estimated that Homeplus gained approximately 200 billion won ($138 million) through this scheme.

Separately, securities firms including Shinyoung Securities, Hana Securities, Hyundai Motor Securities and Eugene Investment & Securities — all involved in issuing and distributing the ABSTBs — have filed their own complaints against Homeplus and its management.

The Seoul Central District Prosecutors’ Office has launched an investigation into the case.

The Financial Supervisory Service (FSS) is also conducting its own investigation, saying at a briefing on April 1 that it believes MBK may have prepared for court receivership before Homeplus’ credit downgrade. The FSS said it would transfer the case to prosecutors if evidence of criminal activity is confirmed.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.

BY SUK GYEONG-MIN, KIM BO-REUM [[email protected]]