Authorities may soon detain the chairman of private equity firm MBK Partners and three other senior executives over suspicious sales of short-term bonds of troubled retailer Homeplus.

The Seoul Central District Court held a hearing on Tuesday to review warrants for MBK Partners Chairman Kim Byung-ju, Homeplus CEO and MBK Vice Chairman Kim Kwang-il, MBK Vice President Kim Jeong-hwan and Homeplus CFO Lee Sung-jin.

A decision could come out as early as this evening. 

The Seoul Central District Prosecutors’ Office filed warrants for the four executives on Wednesday of last week accusing them of fraud, including breaches of the Capital Markets Act and the Act on the Aggravated Punishment of Specific Economic Crimes. 

Prosecutors believe they issued large-scale asset-backed short-term bonds in February last year, even though they were aware that Homeplus’ credit rating would be downgraded.

That same month, management filed for court receivership for Homeplus, which resulted in losses for investors.
 
During their investigation, prosecutors said they also found circumstantial evidence that the MBK executives had been directly briefed on Homeplus’ management deficit since the end of 2023.