The High Cost of Leaving HYBE: NewJeans Potential Exit Fees Explained

NewJeans is set to exit HYBE under significant financial penalties if the company fails to meet the group’s demands by the 25th, according to music industry sources.

On Wednesday, the popular girl group NewJeans issued an ultimatum to HYBE Chairman Bang Si Hyuk, requesting the return to the original ADOR structure, which includes reinstating former CEO Min Hee Jin by September 25th.

Min Hee Jin was removed from her position as the label’s head in August, roughly four months after raising concerns regarding a breach of trust with HYBE.

The quintet announced their demands during an emergency live stream on a now-deleted YouTube channel.

During the broadcast, the members expressed their unwavering support for Min and revealed that they had also experienced mistreatment from both management and artists amid the ongoing tensions between HYBE and ADOR.

In the K-pop industry, it is not uncommon for idols to voice their grievances or demands to their management. Typically, this can lead to artists seeking injunctions to suspend the enforcement of their exclusive contracts if their concerns are not addressed by a designated deadline.

According to the Fair Trade Commission’s standards for exclusive contracts, if either a singer or their agency violates the contract terms, they can request corrective measures within a two-week grace period, and if unresolved, they may initiate a contract dispute.

With NewJeans setting a deadline for HYBE’s response, insiders speculate that the group is preparing for a possible contract dispute should their demands go unmet.

Industry insiders suggest that it is improbable for HYBE to reinstate Min Hee Jin by the 25th. Consequently, NewJeans may face the risk of contract termination with substantial implications, potentially needing to pay a hefty penalty.

The anticipated penalty could exceed 300 billion KRW or approximately 225.4 million USD. According to legal regulations, the penalty amount is calculated by multiplying the “average monthly sales for two years”by the “remaining months of the exclusive contract”prior to its termination.

NewJeans made their debut in 2022, and ADOR, their label that currently represents them as its sole artist, reported sales close to 110.3 billion KRW last year, equating to about 83 million USD.

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