Min Hee-jin Wins Lawsuit Against HYBE Over Stock Put Option... Court Orders Payment of 25.5 Billion Won

Min Hee-jin, former CEO of ADOR(current CEO of ooak records), has won the first trial in the lawsuit related to the put option (stock purchase right) filed against HYBE. The Seoul Central District Court ordered HYBE to pay 25.5 billion won for the stock sale proceeds.

The 31st Civil Division of the Seoul Central District Court (Chief Judge Nam In-soo) ruled in favor of the plaintiff in the stock sale proceeds lawsuit filed by former CEO Min against HYBE on the 12th. The court ordered HYBE to pay 25.5 billion won to former CEO Min, and 1.7 billion won and 1.4 billion won respectively to Shin, the former vice president, and Kim, the former director, who also exercised the put option.

At the same time, the lawsuit filed by HYBE against former CEO Min to confirm the termination of the shareholder agreement was dismissed. Although the two lawsuits are separate, they were heard together as the premise of the put option claim depended on the termination of the shareholder agreement.

The court stated, "It can be acknowledged that former CEO Min sought ways to make ADOR independent from HYBE," but concluded, "This alone cannot be seen as a major violation of the shareholder agreement."

HYBE has claimed that former CEO Min violated the shareholder agreement by terminating the exclusive contract with NewJeans and pushing for ADOR's IPO, thus making the termination notice valid. However, the court did not accept this argument.

In particular, the court sided with former CEO Min regarding the conflicting claims about the meaning of the 'empty shell' statement mentioned in KakaoTalk conversations. HYBE argued that 'empty shell' meant 'ADOR without NewJeans,' but the court, after reviewing meeting minutes and other evidence, concluded that "if former CEO Min exercises the put option and leaves ADOR, it means ADOR without former CEO Min, not 'ADOR without NewJeans.'"

The court also explained, "It appears that former CEO Min's meetings with external investors to seek ways for ADOR's independence were all based on the assumption of HYBE's consent," adding, "If HYBE does not agree, such plans cannot have any effect."

The fact that former CEO Min planned album releases and promotions and diligently carried out her duties even during the dispute, as well as the evaluation of ADOR's fair value at around 2 trillion won after NewJeans, also worked in her favor.

Furthermore, the court determined that the allegations raised by former CEO Min regarding the copying of NewJeans by Ailite and the pushing of albums were not significant grounds for contract violation. The court stated, "The overall impression of Ailite being similar to NewJeans is merely an opinion and value judgment," and that it falls within the management discretion to protect NewJeans' interests.

Regarding the allegations of pushing albums, the court added, "There are credible reasons based on media reports," stating it was a management decision for ADOR.

The court emphasized, "The damages that former CEO Min would suffer from the contract termination are relatively clear and significant," but also stated, "It is difficult to recognize a violation that justifies the termination."

The dispute between former CEO Min and HYBE began in April 2024 over allegations of management rights theft and discrimination against NewJeans. In November of the same year, former CEO Min notified the exercise of the put option, escalating the matter into a lawsuit.

Upon exercising the put option, former CEO Min could receive an amount from HYBE equal to 13 times the average operating profit of ADOR for the previous two years multiplied by her 75% ownership stake in ADOR. As of November 2024, the reference years for the put option calculation are 2022 and 2023, during which ADOR's operating profits were -4 billion won and 33.5 billion won, respectively. At that time, the amount calculated for the 573,160 shares (18%) of ADOR held by former CEO Min was approximately 25.5 billion won.

Previously, in a dispute over the validity of the exclusive contract between NewJeans and ADOR, the same court sided with HYBE. However, in this stock rights lawsuit, former CEO Min's claims were accepted.