NewJeans Loses First Trial... Spotlight Shifts to "Min Hee-jin Lawsuit" [Invest&Law]

Ador Wins First Trial Against NewJeans
HYBE vs. Min Hee-jin Lawsuit Verdict Approaching
Put Option Exercise May Be Restricted If Min Hee-jin Is Found Responsible

The idol group NewJeans lost the first trial in the lawsuit to confirm the validity of their exclusive contract with Ador (a subsidiary of HYBE), drawing attention to how this outcome may impact the ongoing shareholder agreement lawsuit between former Ador CEO Min Hee-jin and HYBE. While the exclusive contract lawsuit focused on the question of "who will take NewJeans," the shareholder agreement lawsuit centers on who is responsible for the situation and whether Min can exercise her put option, which is worth several tens of billions of won.

According to legal sources on November 4, the Seoul Central District Court's Civil Agreement Division 31 (Presiding Judge Nam Insoo) will hold a hearing for the shareholder agreement lawsuit on the 27th, during which Min will be questioned. The court plans to conclude the hearing process after the session scheduled for December 18, with a first-instance verdict expected as early as January or February next year.

Prolonged Legal Dispute... First Trial of NewJeans Lawsuit Ends in "Ador Victory"

The conflict between HYBE and Min erupted in April last year. At the time, HYBE accused Min of "attempting to seize management control," filed a complaint against her, and launched an audit of Ador. Min held a press conference to deny the allegations and, in turn, accused HYBE of "copying Ador and discriminating against NewJeans."

After Min was dismissed as CEO and the conflict continued, her side exercised the put option based on the shareholder agreement previously signed with HYBE. The put option amount demanded from HYBE is reported to be about 26 billion won. However, HYBE refused, claiming that Min's breach of trust invalidated the contract. Subsequently, HYBE filed a lawsuit to terminate the shareholder agreement, while Min filed a lawsuit to claim the put option payment.

The conflict then spread to NewJeans. The NewJeans side notified Ador of contract termination, citing "Ador's failure to fulfill its obligations and responsibility for the breakdown of trust, such as the ousting of Min," and Ador filed an exclusive contract lawsuit in response.

The result of the exclusive contract lawsuit was a victory for Ador. On October 30, the Seoul Central District Court's Civil Agreement Division 41 (Presiding Judge Jeong Hoeil) ruled that "the exclusive contract is valid," stating that Min's dismissal alone was not sufficient to conclude that the trust relationship had collapsed. The court also recognized the evidentiary value of KakaoTalk conversations showing Min's attempts to separate Ador, which are known to be key evidence submitted by HYBE in the shareholder agreement lawsuit as well.

Close Attention to Impact on Min's Case... Put Option May Be Restricted if Responsibility Deemed Significant

Since the claim of a breakdown of trust was not accepted in the exclusive contract lawsuit, there is a possibility that the same logic will influence the shareholder agreement lawsuit. The outcome of this lawsuit will determine whether Min can exercise her put option, depending on who is found to have breached contractual trust first. If Min is found to bear significant responsibility, her exercise of the put option may be restricted.

At the hearing held in September, HYBE's Chief Legal Officer Jeong Jinsoo appeared as a witness and claimed, "The audit revealed Min's plan to seize management control." Min appeared in court herself and countered that the opposing statements were lies or perjury. At the upcoming hearing on the 27th, Min will be directly questioned. After two more hearings in November and December, the court is expected to conclude the proceedings, with a first-instance ruling on the termination of the shareholder agreement and the exercise of the put option anticipated in the first half of next year.

Meanwhile, immediately after losing the first trial in the exclusive contract lawsuit, the NewJeans side announced their intention to appeal, stating, "It is impossible to return to Ador and continue activities."