Seoul: A Seoul court on Wednesday approved a corporate rehabilitation plan for Homeplus Co., allowing the financially troubled discount store chain to take the first step to revive its operation.

According to Yonhap News Agency, the Seoul Bankruptcy Court approved the plan immediately after creditors and shareholders voted in favor of it during a meeting earlier in the day. In March last year, the retailer, wholly owned by private equity firm MBK Partners, filed for corporate rehabilitation after its credit rating declined amid liquidity concerns. The company later submitted a rehabilitation plan to the bankruptcy court.

"The key to the rehabilitation plan is securing profitability by scaling down its business to focus on profitable stores, while immediately selling some stores to use the proceeds primarily to repay creditors," MBK Partners Vice Chairman Kim Kwang-il said. With the approval, Homeplus will begin repaying its debts in accordance with the rehabilitation plan.

The court plans to terminate the rehabilitation proceedings once the company begins making repayments. The distressed retailer temporarily closed its outlets starting July 13 due to a lack of operating capital and difficulties in maintaining store operations.

One of the key parts of the corporate rehabilitation plan is to repay debts by selling assets. Under the plan, Homeplus aims to sell 19 closed stores by February 2028 to repay parts of debts amounting to 1.3 trillion won (US$950 million). A union of Homeplus said the court's approval of the corporate rehabilitation plan should become a starting point to normalize the retailer's operation.