A Seoul court approved discount store chain Homeplus' request to seek a merger and acquisition(M&A) deal before a court decision on whether to authorize its rehabilitation plan.

The Seoul Bankruptcy Court on Friday greenlit Homeplus' push for an M&A deal before the rehabilitation court ruling, while giving it permission to select an M&A adviser.

The court said the deal should be carried out on terms favorable to all involved parties, including Homeplus' creditors and employees, and that rehabilitation security rights and claims will be repaid early.

Earlier in the week, the retail chain sought the approval, citing the need to guarantee employment for its executives and workers, protect business activity of its suppliers, and pay back to its creditors.

Homeplus, which filed for corporate rehabilitation in March, is required to submit its rehabilitation plan to the court by July 10.