Former ADOR CEO Min Hee-jin, now CEO of ooak Records, won the first trial in a lawsuit over termination of a shareholder agreement with HYBE.
The court acknowledged that Min sought ways for ADOR to become independent. However, it said those discussions were premised on HYBE's consent and it is hard to conclude they led to execution within the contract period, so it did not amount to a breach.
The Civil Agreement Division 31 of the Seoul Central District Court (Presiding Judge Nam In-su, Director General judge) on the 12th dismissed HYBE's suit seeking confirmation of termination of the shareholder agreement against Min and upheld Min's claim against HYBE for stock sale proceeds (put option). The court said HYBE must pay 25.5 billion won to Min, 1.7 billion won to a former deputy CEO surnamed Shin, and 1.4 billion won to a former director surnamed Kim.
HYBE filed the suit in Jul. 2024, arguing that Min planned and carried out what it called "taking NewJeans away," violating the contract. In Nov. 2024, Min signaled an intent to exercise a put option on ADOR equity against HYBE, setting off a legal battle.
The first issue in the lawsuit was whether Min attempted to separate ADOR from HYBE. Min argued after the conflict with HYBE surfaced that the "plan for ADOR's independence" was not true. But the court found, "It can be acknowledged that Min Hee-jin sought to weaken HYBE's control and explored ways for ADOR's independence."
Looking at Min's KakaoTalk messages admitted as evidence, Min's side assumed that if Min exercised the put option and left ADOR, ADOR would become an "empty shell." It then envisioned working with outside investors to buy ADOR equity, whose value would have fallen, from HYBE at a low price. There were also indications that an outside investor told Min to "bring NewJeans out."
The court said the attempt at independence was a fact, but it did not violate the shareholder agreement with HYBE. It judged that Min's independence blueprint was premised on HYBE's consent. It relied on statements and a police non-referral decision from a complaint HYBE filed accusing Min of breach of trust in the course of duty that ended in "no charges." These included items such as "obtain HYBE's consent and raise 300 billion won" for an initial public offering (IPO) as one of the ADOR independence options.
The court said, "It is questionable whether such actions (Min's attempt at independence) hindered ADOR's growth and development or caused losses," adding, "Min's side appears to have contacted various investors to explore ADOR's independence plans, but all assumed HYBE's consent."
It also found it difficult to pinpoint when the plan for independence would be executed. HYBE argued that Min devised and sought execution strategies for an independence plan premised on leaving before the mandatory contract term of Nov. 2026, but the court's view differed.
The court noted, "It is hard to tell from the KakaoTalk messages whether Min would exercise the put option and leave immediately or leave in Nov. 2026," and said, "It is difficult to conclude that the departure plan was before the mandatory employment period."
A legal industry source said, "They dreamed it, but the court saw they didn't cross the line." The person added, "A premise for a shareholder agreement case is a breakdown of trust, and the court appears to have interpreted that narrowly," explaining, "Merely planning an attempt at independence did not amount to a breakdown of trust."
The person added, "It is also notable that the court referred to the police's non-referral decision as a key reference regarding the breach of trust allegation in the course of duty," and said, "Both the non-referral decision and the KakaoTalk messages submitted to the court are materials open to interpretation, and the judgment could change on appeal depending on new evidence or the appellate court's view."
HYBE said, "It is regrettable that our position was not sufficiently accepted," adding, "We plan to proceed with future legal procedures, including an appeal, after reviewing the written ruling."