Former Ador CEO Wins at First Instance
"No Material Breach of Shareholders' Agreement"
In the legal dispute over the shareholders' agreement between HYBE and former Ador CEO Min Heejin, the court has ruled in favor of Min. As the court did not accept HYBE's claims that there had been grounds for termination such as an attempt to seize management control, HYBE is now required to pay Min and others more than 25 billion won as stock sale proceeds.
On the 12th, the 31st Civil Division of the Seoul Central District Court (Presiding Judge Nam Insu) dismissed the lawsuit filed by HYBE seeking confirmation of termination of the shareholders' agreement against Min. At the same time, in the lawsuit filed by Min demanding payment of stock sale proceeds, the court ordered HYBE to pay 25.5 billion won to Min.
The court also ordered HYBE to pay 1.7 billion won to former Deputy CEO Shin and 1.4 billion won to former Director Kim, respectively. All litigation costs are to be borne by HYBE.
The key issue in this ruling was whether Min’s pursuit of a plan to make Ador independent constituted a material breach of the shareholders' agreement. The court stated, "It is acknowledged that Min sought ways to make Ador independent," but added, "This was only at the level of a conceptual plan premised on a breakdown in negotiations with HYBE, and it was structured in a way that could not be implemented without HYBE's consent." The court went on to say, "This circumstance alone cannot be viewed as a material breach of the shareholders' agreement."
Regarding the message that HYBE took issue with, to the effect of "If I leave, Ador will become an empty shell," the court found that Min was merely referring to a decline in corporate value in the event of her departure, and that there was insufficient evidence to conclude that this was an attempt to take NewJeans away.
Min’s raising of suspicions that ILLIT had copied NewJeans, as well as her disclosure of alleged album "bulk buying" by HYBE, were also recognized as legitimate business judgments. The court viewed the raising of plagiarism suspicions as a mere expression of opinion, and explained that the disclosure regarding album bulk buying "appears to have been based on an actual suggestion from HYBE’s side and has aspects that contributed to establishing order in album distribution."
In November 2024, Min resigned from her position as an inside director of Ador and notified HYBE of her exercise of the put option. The put option price was calculated based on Ador’s 4 billion won operating loss in 2022 and its 33.5 billion won operating profit in 2023.
HYBE refused to pay the amount, citing Min’s alleged breach of contract, and notified her in July 2024 that it was terminating the agreement. However, as the court found that there were insufficient grounds for termination, HYBE has become obligated to pay the amount.
HYBE has made it clear that it intends to appeal this ruling. On this day, HYBE stated, "It is regrettable that our arguments were not sufficiently accepted," adding, "We plan to proceed with future legal steps, including an appeal, after reviewing the written judgment."
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