Court Orders HYBE to Pay Minhee 25.5 Billion Won in Exercise Option Payment; Rejects Company’s Request to Terminate Shareholder Agreement

The Seoul Central District Court ruled in favor of former ADOR CEO Minhee in his lawsuit against HYBE over an exercise option. The court ordered HYBE to pay Minhee 25.5 billion won, and it also mandated payments of 1.7 billion won and 1.4 billion won respectively to former ADOR vice president Shin and former director Kim, who had jointly exercised the option. Meanwhile, HYBE’s attempt to terminate the shareholder agreement was dismissed.

Judge Nam In-soo acknowledged that Minhee attempted to separate ADOR from HYBE but determined this did not constitute a serious breach of the shareholder agreement. The court interpreted Minhee’s use of the term “empty shell” in KakaoTalk conversations with his associates as meaning that ADOR would become an empty shell if Minhee exercised the option and left the company. Unlike HYBE’s interpretation that it referred to “ADOR without NewJeans,” the court saw it as indicating a decline in the company’s value following Minhee’s departure.

HYBE’s claim that Minhee aimed to remove NewJeans was also rejected. The court stated that Minhee’s discussions with external investors regarding ADOR’s independence were all based on the assumption of HYBE’s approval, noting that such plans would have no effect without HYBE’s consent. Additionally, Minhee’s allegations about ILLIT copying NewJeans and pushing their albums were deemed within the scope of managerial discretion aimed at protecting NewJeans’ interests.

The basis for calculating the exercise option payment is ADOR’s operating profit. For the years 2022 and 2023, which served as the calculation basis as of November 2024, ADOR recorded a loss of 4 billion won in 2022 and a profit of 33.5 billion won in 2023. The court ordered HYBE to pay 25.5 billion won based on an amount equal to 13 times the average profit of these two recent years, applied to 75% of Minhee’s 18% shareholdings that could be exercised.

The court emphasized that while the losses Minhee would suffer are relatively clear and significant, it is difficult to determine that there was a breach serious enough to justify terminating the agreement. After the ruling, HYBE stated it plans to review the judgment and pursue further legal actions such as an appeal, suggesting the possibility of the case going to an appellate court.