As HYBE, South Korea’s leading agency behind BTS, clashes head-on with its subsidiary ADOR, HYBE’s audit team uncovered evidence that ADOR CEO Min Hee-jin was preparing a “two-track” strategy to seek independence. The strategy involves either pressuring HYBE to sell its controlling 80% stake to a private equity fund (PEF) she had partnered with or establishing a new company with NewJeans, should the sale falter.
In the event of the latter, the audit revealed that considering the penalty NewJeans would have to pay to leave HYBE, Min was planning to argue that “HYBE is liable for terminating the contract with NewJeans for unfair treatment, and NewJeans also wants to split from the parent company.”
Min claimed that the corporate feud began when ILLIT, HYBE’s new girl group, “copied NewJeans without consent,” setting the stage for a potential legal battle between the two parties. HYBE has appointed South Korea’s top law firm, Kim & Chang, as its legal representative, while Min has secured another prominent law firm, Shin & Kim.
Following the allegations that Min was conspiring to spin off ADOR from HYBE, taking NewJeans with her, HYBE launched an extensive audit and digital forensic investigation of ADOR on April 23, according to sources in the investment banking sector.
HYBE’s audit team discovered that Min’s initial plan was to acquire a controlling stake in ADOR, making her the de facto majority shareholder. Min reportedly contacted several private equity firms, proposing they ally with her. Her next step involved pressuring HYBE to sell its 80% majority stake in ADOR to a private equity firm she partnered with, using NewJeans as a bargaining chip. HYBE believes that Min intended to consolidate her 18% stake in ADOR with additional private equity shares to secure majority ownership.
Should Min’s plan to become ADOR’s majority shareholder fail, HYBE’s audit team revealed that she prepared Plan B, which involved terminating the contract between NewJeans and ADOR while shifting the blame to the parent company, HYBE. The audit findings also show that Min has been compiling evidence suggesting HYBE had neglected ADOR and NewJeans. As NewJeans debuted in 2022, terminating the contract now would result in significant penalties.
Min refuted claims of attempting a management takeover, accusing HYBE of “seriously infringing on NewJeans’ cultural achievements by copying NewJeans while producing ILLIT.” This statement can be interpreted as part of Min’s strategy to attribute the blame for any contract termination onto HYBE, should HYBE’s audit findings turn out to be true.
Legal experts say the first scenario in which Min becomes the majority shareholder is highly unlikely. “While it’s possible for Min to find financial backers, the likelihood of HYBE selling its stake is very slim,” said a lawyer familiar with the matter.
On the other hand, it would be relatively easier for Min to blame HYBE for “unfair treatment” and set up a new company with NewJeans, according to experts. If Min’s allegations that HYBE has mistreated ADOR and NewJeans are proven, they could avoid breach of contract penalties. Min could use an alternative strategy even if these claims are not acknowledged. One option is establishing a separate entity, receiving investments from private equity funds, and using these funds to cover any penalties.
