NewJeans Announces Termination of Contract with Ador: Is a Safe Separation Possible?

On November 28, NewJeans officially announced the termination of their exclusive contract with their agency, Ador. During a press conference held in Seoul, the group declared that their contract would be nullified as of midnight on November 29.

The members expressed that they had suffered significant distress due to Ador's failure to fulfill its duty to protect them, which they believe constitutes a valid reason for contract termination. They asserted that there was no need for a preliminary injunction or to pay any penalties. Furthermore, they emphasized their desire to continue working with former Ador CEO Min Hee-jin and stated that they have no intention of relinquishing the NewJeans name.

Fans have shown overwhelming support for NewJeans' decision. The fan union, Team Bunnies, released a statement expressing their full backing for the members, stating, "We will stand by the members until the end, ensuring they can share the true joy of music in a happy environment with trustworthy people, continuing their beautiful journey."

However, Ador's stance differs significantly. The agency expressed regret over the press conference, stating that they had not received a response to their notice before the announcement was made. Ador claims that they have not violated the contract and that a unilateral breakdown of trust does not constitute grounds for termination. They maintain that the exclusive contract with NewJeans remains valid.

If NewJeans proceeds with the termination, they could face astronomical penalties. According to the Fair Trade Commission's standard exclusive contract, the penalty is calculated based on the average monthly revenue over the past two years multiplied by the remaining months of the contract. Given that Ador's revenue last year was approximately 110.3 billion KRW, and with NewJeans having a remaining contract period of five years, industry estimates suggest that the penalty could range from 400 billion to 600 billion KRW.

Despite this, the members have stated that they see no reason to bear such risks or engage in litigation. Legal expert Lee Hyun-gon from Saeol Law Firm commented on social media, noting that the most striking aspect of NewJeans' press conference was their intention to terminate the contract without pursuing legal action, a move that is unprecedented. He explained that while a preliminary injunction would prevent them from acting until a conclusion is reached, they could leave without litigation, forcing Ador to initiate any legal proceedings against them.

Lee further supported NewJeans, stating that their reasons for contract termination are valid, especially considering that HYBE unilaterally terminated its shareholder agreement with Min Hee-jin without justification.

However, industry perspectives vary. While it is true that NewJeans has achieved significant success as Ador's sole artist, generating over 100 billion KRW in revenue, this success is not solely attributed to Min Hee-jin. The members were trainees under HYBE's subsidiary, Source Music, prior to joining NewJeans, meaning that all training and management costs were covered by HYBE. Additionally, Ador was established with HYBE's financial backing, which facilitated the creation of NewJeans and the production of their albums.

Despite NewJeans' rapid success, industry insiders believe that HYBE has no incentive to release them from their contract as they are currently Ador's only artist. If the gap between the two parties cannot be bridged, a legal battle may ensue.

Regardless, NewJeans has embarked on a journey to find their own path. The question remains whether they can successfully separate from HYBE and create another phenomenon like "OMG" (오엠지).