Court Rejects Arrest Warrants for MBK Partners Founder in Homeplus Fraud Investigation

A Seoul court has rejected arrest warrants for Michael ByungJu Kim, founder and chairman of private equity firm MBK Partners Ltd., and three senior executives accused of fraud in connection with the collapse of hypermarket chain Homeplus Co. The decision marks a significant setback for prosecutors pursuing one of South Korea's highest-profile investigations into private equity practices.

Following the court's ruling, MBK Partners stated it would continue efforts to stabilize Homeplus through rehabilitation measures, as the once-prominent retailer remains under court-supervised restructuring. The case has sent shockwaves through South Korea's private equity sector, prompting increased scrutiny of buyout firms operating in the country.

Background and Context

The allegations stem from MBK's 2015 landmark leveraged buyout of Homeplus, which at the time represented one of South Korea's largest private equity acquisitions. The hypermarket chain, previously owned by British retailer Tesco, was taken private for approximately 6.5 trillion won ($4.6 billion) in a deal that highlighted the aggressive expansion of domestic private equity firms.

Homeplus's subsequent decline and eventual collapse have raised questions about the buyout's structure and due diligence practices. The company currently operates under court supervision, with rehabilitation measures ongoing as MBK seeks to stabilize operations amid ongoing legal challenges.

Key Figures and Entities

Michael ByungJu Kim, a prominent figure in South Korea's financial sector, founded MBK Partners and has faced mounting legal scrutiny as the Homeplus case unfolded. According to court records, Kim arrived at Seoul Central District Court for a pretrial detention hearing on January 13, 2026, where prosecutors sought his arrest alongside three other unnamed senior executives.

MBK Partners, established as one of Asia's largest private equity firms, has seen its reputation challenged by the Homeplus saga. The firm's various subsidiaries, including MBK Special Situations, have recently faced additional regulatory pressure, with the credit arm voluntarily relinquishing its Korean investment advisory license amid heightened oversight.

Legal and Financial Mechanisms

Prosecutors allege that MBK executives engaged in fraudulent activities related to financial disclosures and asset management following the Homeplus acquisition. While specific details of the alleged fraud remain sealed in court documents, the case centers on whether investors and creditors were misled about the retailer's financial condition and prospects.

The leveraged buyout structure itself has drawn criticism from industry observers, who note that such transactions can leave acquired companies burdened with excessive debt. In Homeplus's case, the buyout's financial architecture may have contributed to operational difficulties that ultimately led to the company's collapse and need for court-supervised restructuring.

International Implications and Policy Response

The Homeplus investigation has prompted broader reflection on South Korea's private equity regulatory framework. The National Pension Service (NPS), the country's largest institutional investor, announced it would not participate in investments related to hostile mergers and acquisitions led by MBK Partners, signaling increased caution from major capital providers.

Industry analysts suggest the case may lead to stricter oversight of private equity transactions, particularly involving leveraged buyouts of major retail operators. The outcome could influence how international private equity firms structure deals in South Korea and may serve as a catalyst for regulatory reforms aimed at increasing transparency and protecting stakeholders in complex buyout scenarios.

Sources

This report draws on court filings and proceedings from the Seoul Central District Court, corporate statements from MBK Partners Ltd., and news reporting from Yonhap News Agency and other Korean financial media outlets published between 2015 and 2026. Additional context comes from industry analysis of South Korea's private equity sector and regulatory developments affecting leveraged buyout transactions.