Hybe (left) and former ADOR CEO Min Hee-jin. Photo | Kyunghyang DB

Former ADOR CEO Min Hee-jin (currently CEO of OK Records) has won the lawsuit over a put option (right to sell shares) worth about 26.0 billion won against Hybe. The court ordered Hybe to pay 25.5 billion won to the former CEO Min.

The Civil Agreement Division 31 of the Seoul Central District Court (Chief Judge Nam In-su) at 10 a.m. on the 12th, at the ruling date for Hybe’s suit seeking confirmation of termination of the shareholders agreement against former ADOR CEO Min Hee-jin and Min’s suit seeking payment of the share sale price against Hybe, dismissed Hybe’s suit and ruled, “Hybe shall pay approximately 25.5 billion won to Min Hee-jin.” Min did not attend the hearing that day.

The bench acknowledged indications that Min had reviewed ways to make ADOR independent, but determined it was difficult to regard this as a material violation that would undermine the essence of the shareholders agreement.

ADOR CEO Min Hee-jin holds a press conference related to ADOR’s extraordinary general meeting of shareholders at the Press Center in Jung-gu, Seoul, on the 31st. 2023.05.31 Reporter Kwon Do-hyun

The court stated, “The independence plan was only at the conceptual stage, premised on a breakdown in negotiations with Hybe, and it was structured such that it could not be implemented without the consent of Hybe,” and, regarding the claim by Hybe of ‘poaching NewJeans’, found the basis insufficient and ruled in favor of Min.

Regarding the issues Min raised about ‘ILLIT’s alleged plagiarism of NewJeans’ and ‘album dumping by Hybe’, the court stated, “The concepts and the like raised by Min Hee-jin are ideas rather than modes of expression protected by copyright. Even if they may not receive legal protection, the copy controversy raised by Min appears to be a matter that should be resolved through public discourse. Min can be seen as bearing a duty of loyalty to protect the value of NewJeans, and sending an email raising the issue of similarity with ILLIT can be regarded as an obligation under the shareholders agreement,” making clear it is difficult to view this as dissemination of false information.

The bench held, “The grounds for termination asserted by Hybe are abstract or amount only to breaches of ancillary obligations,” and, “Compared with the serious detriment of losing the put option that termination of the contract would impose on Min, the degree of breach cannot be considered serious,” thereby announcing Min’s victory.

Min and Hybe had been in intense conflict since April 2024 over allegations of a management takeover and discrimination against NewJeans, and suits were filed in August and November of the same year, respectively. For efficient proceedings, the court conducted the cases in parallel.

At the time, upon exercising the put option, Min could receive from Hybe an amount calculated as 13 times ADOR’s average operating profit for the previous two years, multiplied by 75% of the portion corresponding to her equity stake in ADOR.

As of November 2024, the basis years for calculating the put option were 2022∼2023, and during this period ADOR’s operating profit was minus 4.0 billion won in 2022 (an operating loss of 4.0 billion won) and 33.5 billion won in 2023.

According to the ADOR audit report released in April 2024, Min at that time held 573,160 shares in ADOR (18%), and based on this, the amount she would receive by exercising the put option is about 26.0 billion won.

Hybe has argued that it already notified termination of the contract in July 2024, when Min attempted ‘NewJeans tampering’ and harmed the company, so the put option right was extinguished as well. Because the termination notice was given for a material breach of the shareholders agreement by Min, any exercise of the put option thereafter would be invalid.

By contrast, Min argued that at the time she exercised the put option, the shareholders agreement was valid and Hybe had no right to terminate it. The NewJeans members notified ADOR of termination of their exclusive contracts in late November of the same year, so the put option exercise made before that was itself lawful.

The same panel is also hearing a damages suit that ADOR filed against former CEO Min, Danielle, and others. ADOR is seeking about 43.09 billion won, holding them responsible for the departure of NewJeans and the delay in their return.