MBK faces business suspension as regulator moves against management of Homeplus
The Financial Supervisory Service is expected to propose a suspension of duties for the firm, as the retailer’s survival hangs on a court decision and an emergency funding fight.
A person walks by a Homeplus branch in downtown Seoul on May 8.NEWS1
A regulator has proposed one of the toughest sanctions on the books for MBK Partners over its handling of Homeplus, a move that would effectively halt the private equity firm's new business activities.
The Financial Supervisory Service's (FSS) sanctions review committee reached the conclusion on Thursday, maintaining the recommendation it had notified the private equity firm of in November that it be suspended from duties, according to financial industry sources.
The FSS, for its part, confirmed only that the deliberation had concluded, declining to disclose the sanction level while the procedure continues.
Under the Financial Investment Services and Capital Markets Act, sanctions against a fund's general partner escalate from institutional caution to institutional warning, suspension of duties for up to six months and finally a demand for dismissal. A suspension bars a manager from taking on new business. The measure is reported to include suspensions for key MBK executives.
At the center of the case is the firm's alleged unsound business conduct and breach of internal control obligations. The regulator took issue with MBK changing the terms of redeemable convertible preferred shares issued in the Homeplus acquisition structure, altering them in favor of the retailer and ultimately giving up the right to redeem. The FSS judged that the move harmed the interests of investors, including the National Pension Service, by lowering the likelihood that they could recover their money.
The conclusion followed months of deliberation. Two earlier sessions in December of last year and January of this year ended without a decision, and even on Thursday, some committee members urged caution over the legal interpretation while the majority backed the original proposal, according to industry sources.
MBK noted that the committee's conclusion alone does not finalize the sanction, and said it would faithfully explain its position on the key issues to the Financial Services Commission, which holds the final decision, and in related legal proceedings. The firm has argued that changing the share terms was a reasonable management decision meant to protect investors by improving Homeplus's financial structure, and that the preferred shares held by the National Pension Service and the altered shares were distinct securities.
The headquarters of MBK Partners in Jongno District, central Seoul, on April 24, 2025NEWS1
MBK and Homeplus's largest creditor, Meritz Financial Group, remain deadlocked, with Meritz conditioning a 100 billion won ($65.3 million) emergency loan on guarantees from MBK and its chairman, which the firm has not accepted.
The impasse has sharpened scrutiny of MBK's own commitment. In a public apology in September of last year, the firm pledged to gift Homeplus up to 200 billion won. But an audit of the retailer showed about 60.7 billion won raised through loans in the 12 months after the March 2025 rehabilitation filing, with no gift-type cash inflow confirmed, and creditors and bond-fraud victims say the only verified cash is about 40 billion won personally donated by MBK chairman Michael ByungJu Kim, a fifth of the pledged amount.
MBK maintains it has provided roughly 400 billion won in financial support including guarantees, a figure Meritz disputes as consisting mainly of guarantees rather than direct capital.
The stakes extend well beyond the boardroom. Homeplus has closed 37 stores, its directly employed work force has fallen from about 20,000 before the rehabilitation to some 12,000 and unions and lawmakers warn that a liquidation could put as many as 100,000 jobs at risk across the retailer, its suppliers and its vendors.
