Korea Startup Forum Raises Concerns Over NewJeans' Contract Dispute with Ador

The Korea Startup Forum (코리아스타트업포럼, 코스포), an organization focused on startups, has expressed serious concerns regarding the recent claims made by the K-pop group NewJeans (뉴진스) about terminating their contract with Ador, a subsidiary of HYBE. In a statement released on December 23, titled 'For Trust in Investment Contracts and a Sustainable Ecosystem,' 코스포 highlighted that the conflict surrounding the investment agreements between HYBE and its subsidiaries poses a significant threat to the integrity of the investment ecosystem.

Investment contracts are legally binding agreements based on mutual trust, encompassing not just financial contributions but also intangible assets such as opportunity costs, time, and shared vision. These contracts are crucial for protecting business assets and rights while fostering growth between investors and investees.

코스포 warned that if the interpretation and execution of contracts are unilaterally undermined, it could damage the essence of investment decisions and lead to a pervasive distrust that would be difficult to recover from across the investment ecosystem. They emphasized that a decline in social trust regarding the execution of investment contracts could severely dampen investor sentiment and have catastrophic effects on the ecosystem as a whole.

The organization further noted that instances of unilateral contract nullification could drastically reduce investors' willingness to invest, which would not only affect individual contracts but could also erode overall trust in the South Korean startup ecosystem.

Moreover, they cautioned that if international investors lose confidence in the South Korean market, it could hinder global investment attraction, limiting growth opportunities for domestic startups and ultimately weakening the competitiveness of the South Korean startup ecosystem.

Following the recent developments, 코스포 reported a significant decline in investment sentiment within the entertainment industry. They reiterated that the faithful execution of investment contracts, fair legal interpretation, and respect for judicial decisions are fundamental principles that safeguard the long-term interests of all market participants. 코스포 strongly urged for the restoration of social trust and the establishment of fair norms, committing to ongoing discussions and collaborations to create an environment where startups and investors can thrive together.

After NewJeans announced their intention to terminate their contract with Ador and began independent activities, suspicions of tampering arose. Tampering refers to prior contact with artists who are under exclusive contracts with other companies. The members of NewJeans previously expressed their desire to work with Min Hee-jin, the former CEO of Ador, after she resigned from her position and left HYBE.

Ador maintains that the contract with NewJeans is valid until July 2029 and has filed a lawsuit to confirm the validity of the contract with the members.