Seoul: A court on Friday approved a request to allow discount store chain Homeplus Co. to pursue a merger and acquisition (M and A) deal before a court decision on whether to approve its rehabilitation plan.

According to Yonhap News Agency, the Seoul Bankruptcy Court approved Homeplus' pursuit of the M and A deal and the selection of an M and A adviser prior to its rehabilitation plan-related court ruling.

The court stated that the M and A will be conducted on terms that are favorable to all interested parties, including the debtor company's creditors and employees. Additionally, the court assured that rehabilitation security rights and claims will be repaid early.

Homeplus had filed for corporate rehabilitation with the Seoul Bankruptcy Court in March after two domestic credit rating agencies downgraded its corporate bonds from A3 to A3-, due to the company's lack of progress in improving its financial health. The company is required to submit its rehabilitation plan to the court by July 10.

A court-appointed accounting firm last week recommended approval for Homeplus' pursuit of the M and A deal.