Legal Battle Intensifies Between HYBE and Former ADOR CEO Min Hee-jin Over Shareholder Agreement Termination

The legal dispute between HYBE and former ADOR CEO Min Hee-jin continues to escalate over the termination of a shareholder agreement. This conflict is directly tied to the exercise of a 'put option' worth approximately 28 billion KRW (around $23 million USD) concerning Min's shares in ADOR, with both parties maintaining opposing stances.

On the 17th, the Seoul Central District Court's Civil Division 31, presided over by Judge Nam In-soo, held the second hearing for the lawsuit filed by HYBE against Min to confirm the termination of the shareholder agreement. Both sides presented their arguments regarding the validity of the agreement and the practical implications of the lawsuit.

HYBE claims that Min attempted to seize control of ADOR, leading them to notify her of the agreement's termination in July of last year. This was publicly disclosed in HYBE's semi-annual report in August. Subsequently, HYBE initiated legal proceedings to confirm the termination.

Min, however, argues that the termination is invalid. Her legal team asserts, "A shareholder agreement cannot be unilaterally terminated without mutual consent or a breach of contract," and claims that HYBE's termination notice holds no legal weight, as confirmed by a court injunction that found no breach of contract.

The crux of the dispute is whether Min's right to sell her ADOR shares to HYBE via the put option was nullified by the termination. In November of last year, Min announced her intention to exercise the put option on approximately 13.5% of her 18% stake in ADOR. HYBE contends that the option is void due to the prior termination of the agreement.

The parties also debated the practical benefits of the lawsuit. HYBE emphasized, "There is a legal interest in confirming the validity of the put option since it was exercised after the agreement's termination." Conversely, Min's team argued, "The agreement was still valid when the option was exercised, leaving no room for legal dispute, thus rendering the lawsuit unnecessary."

This conflict traces back to April of last year when HYBE accused Min of attempting to seize control and breach fiduciary duty. HYBE sought to remove Min and replace the board, while Min filed an injunction to prevent HYBE from exercising its voting rights. The court at the time found no sufficient evidence of breach but did suspect an attempt to seize control, granting Min's injunction.

Ultimately, HYBE replaced ADOR's board through an extraordinary shareholders' meeting and officially notified Min of the agreement's termination, subsequently filing a confirmation lawsuit. Separately, Min has filed a lawsuit against HYBE for the put option payment.

The court, summarizing the arguments, noted the complexity of the intertwined issues of contract termination and put option exercise, scheduling a third hearing for June 12. The court also decided to consolidate the related 'put option payment lawsuit' for joint consideration.

A legal expert commented, "The termination of the shareholder agreement is a pivotal issue directly affecting Min's right to exercise the put option. If the contract was indeed terminated, the option could be void, but if the conditions were met before termination, the right might be upheld. The court will consider the contract's interpretation, the timing of termination, and the legal interpretation of the parties' actions comprehensively."

Industry insiders believe, "This trial will have significant implications not only for the ADOR management dispute but also for investment contract practices within the K-POP industry."

Choi Ji-ye, TenAsia Reporter wisdomart@tenasia.co.kr