Both Sides Face Legal Battle Threat One Year After Resolving Jeongsan Conflict
Following HYBE, SM Entertainment has also become embroiled in a legal dispute. Baekhyun, Xiumin, and Chen (ChenBaekXi) of the group EXO, who had conflicts over settlement issues last year but reached an agreement, are now claiming that "SM Entertainment is not honoring the terms of the agreement" and have hinted at taking legal action.
On the afternoon of the 10th, INB100, the agency representing ChenBaekXi, held an emergency press conference at the Shilla Hotel in Jung-gu, Seoul. Attending the event were Cha Ga-won, chairman of One Hundred, the parent company of INB100; Kim Dong-jun, CEO of INB100; and Lee Jae-hak, a lawyer from the law firm Lynn.
Lawyer Lee began by saying, "Many fans and the public will remember that SM issued a legal stance regarding the artists last year and that negotiations were concluded." He then claimed, "Despite the negotiations being settled, SM has withheld the 5.5% of album revenue that was to be paid to INB100 and demanded that ChenBaekXi pay 10% of their sales revenue."
Previously, the three EXO members had renewed their contracts with SM Entertainment but later notified the termination of their exclusive contracts last year, citing reasons such as the failure to properly provide settlement data, and filed a complaint with the Fair Trade Commission against SM Entertainment. Subsequently, both parties agreed to maintain the exclusive contracts with SM Entertainment while allowing the three members to conduct their individual activities independently under INB100. INB100 was incorporated last month as a subsidiary of One Hundred, jointly invested in by Chairman Cha and MC Mong.
On this day, Lawyer Lee revealed a conversation between Lee Sung-soo, SM Entertainment’s CAO (Chief A&R Officer), and Cha Ga-won, chairman of the Piak Group, stating that Lee Sung-soo promised to apply a 5.5% distribution fee rate from the distributor Kakao for album and digital music distribution.
Lawyer Lee also disclosed that they sent a certified letter in April pointing out SM Entertainment’s failure to fulfill this promise but received no response. He stated, "Since the agreement no longer holds meaning, we are considering canceling the June 18 agreement from last year on grounds of fraud or breach of obligation, as well as pursuing criminal charges and filing a complaint with the Fair Trade Commission regarding the agreement process."
Chairman Cha declared, "At this moment, we intend to restart a full-scale confrontation with SM Entertainment. SM Entertainment must provide the members’ settlement basis data," sharpening his stance.
In response, SM Entertainment issued a statement asserting, "The essence of this entire incident is the unfair tampering (prior contact before contract termination) by MC Mong and Chairman Cha Ga-won’s side with our affiliated artists." They added, "For a long time, MC Mong and Chairman Cha Ga-won’s side have approached several artists who have valid exclusive contracts with us. Subsequently, ChenBaekXi began to find faults in an attempt to invalidate the validly signed renewal contract."
SM Entertainment further emphasized, "The exclusive contract between us and ChenBaekXi is still valid," and stated, "While allowing individual activities through personal corporations, ChenBaekXi themselves signed the agreement to pay 10% of the personal corporation’s sales revenue."
They continued, "When it became difficult to adjust the distribution fee rate as ChenBaekXi desired despite our efforts, we provided other considerations," revealing that Baekhyun was allowed to release his solo album through his personal corporation and that SM Entertainment paid the penalty for his canceled concert in Japan.
SM Entertainment concluded, "We will not tolerate ChenBaekXi’s repeated claims that both the exclusive contract and the agreement are invalid for their own personal gain," adding, "We will calmly respond through law and principles and hold ChenBaekXi accountable through the courts."
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