2025-03-21 Injunction to Preserve Agency Status and Prohibit Advertisement Contract Execution Verdict

Korean original: 서울중앙지방법원-2025카합20037.pdf ~ pixeldrain 

English translation: 250323 Injunction to Preserve Agency Status and Prohibit Advertisement Contracts - Google Docs 

Seoul Central District Court

50th Civil Division
Decision

Case:

2025KaHab20037 – Injunction to Preserve Agency Status and Prohibit Advertisement Contract Execution

Petitioner:

Company A
CEO B
Legal Representatives: Attorneys C, D, E, F, G, H, I
Additional Legal Representative: Attorney J

Respondents:

1. AM
   
   

2. L
   
   

3. M
   
   

4. N (Minor, Legal Guardians: Father 0, Mother P)
   
   

5. Q (Minor, Legal Guardians: Father R, Mother BC)
   
   

Respondents’ Legal Representatives: Law Firm Sejong
Attorneys in Charge: S, T, U, V, W, BD, Y, Z

Order

1. Until the first-instance ruling in case 2024GaHab113399, which concerns the validity of the exclusive contract between the petitioner and the respondents:
   a. The petitioner is temporarily recognized as the management company of the respondents based on the exclusive contract dated April 21, 2022.
   b. The respondents must not engage in any entertainment activities listed in the appendix, either personally (including through their legal guardians) or through any third party other than the petitioner, without the prior approval or consent of the petitioner.
   
   

2. The respondents shall bear the litigation costs.

Request Summary

A decision in accordance with the above order.

Reasoning

1. Facts Established

Based on the records and the entirety of the hearing, the following facts have been established:

a. The petitioner is a subsidiary of Company AB (hereinafter "AB"), engaged in music production, record production, and entertainment management. The respondents are entertainers who have been active as members of the girl group "X" (<English Name>).

b. The respondents were trainees under Company AC (hereinafter "AC") between 2018 and 2021. After the petitioner was established on November 2, 2021, the respondents continued training under the petitioner, preparing for their careers as singers. On April 21, 2022, they signed exclusive contracts (hereinafter referred to collectively as "the Exclusive Contracts") with the petitioner, granting the petitioner exclusive management rights over their entertainment activities.

Key Clauses of the Exclusive Contract

Article 1: Purpose

This exclusive contract is based on the premise that both the creditor and the debtors will actively cooperate for their mutual benefit and development. The debtors shall strive to demonstrate their talents and abilities to the fullest, pursue self-development, and cherish their honor and reputation as public cultural artists. Meanwhile, the creditor shall diligently provide management services to maximize the debtors’ potential and work to enhance their interests, ultimately promoting mutual benefits.

Article 2: Granting of Management Rights, etc.

1. The debtors delegate exclusive management rights to the creditor for their activities as public cultural artists, as specified in Article 4 (hereinafter referred to as "entertainment activities"). The creditor shall exercise these management rights accordingly. However, if both parties agree to reserve the delegation of certain exclusive management rights, this clause shall not apply. The creditor shall faithfully exercise its management rights to ensure that the debtors can fully demonstrate their talents and abilities. Additionally, within the scope of its management authority, the creditor shall make its best efforts to protect the debtors' personal rights, including their privacy, from both internal and external violations related to their entertainment activities.
   
   

2. During the contract period, the debtors shall not, without the creditor's prior approval, engage in negotiations for appearances or entertainment activities independently or through any third party other than the creditor, in any region, including South Korea and worldwide, where the creditor has exclusive rights.
   
   

Article 3: Contract Period and Renewal

1. This exclusive contract takes effect from the date of signing and will terminate on the seventh anniversary of the official release date (debut date) of the first album or digital music of the group to which the debtors belong.

Article 4: Scope and Media of Entertainment Activities

1. The entertainment activities of the debtors shall include the following:
   
   

   1. Activities as musicians, including songwriting, composing, performing, and singing, as well as related activities such as TV appearances and event hosting.
      
      

   2. Acting-related activities, including working as actors, models, voice actors, and TV talents.
      
      

   3. Commercial activities based on the debtors’ status and popularity as public cultural artists, including appearing in advertisements as advertising models.
      
      

   4. Other activities related to the above categories, though not limited to them. If there is any uncertainty about whether an activity qualifies as an entertainment activity, both parties shall determine it through mutual consultation.

Article 5: Creditor's Management Authority and Obligations

1. Under this exclusive contract, the creditor shall have the following management authority and obligations regarding the debtors:
   
   

   1. Conducting or outsourcing all necessary training for skill acquisition and improvement.
      
      

   2. Negotiating and signing contracts related to entertainment activities.
      
      

   3. Promoting and advertising entertainment activities.
      
      

   4. Receiving and managing compensation from third parties for the debtors' entertainment activities.
      
      

   5. Planning, organizing, directing, and scheduling entertainment activities.
      
      

   6. Planning, producing, distributing, and selling content.
      
      

   7. Providing various other support necessary for the debtors' entertainment activities.
      
      

2. The creditor shall have the authority to negotiate and adjust the terms and execution of contracts related to the debtors' entertainment activities with third parties on behalf of the debtors. In exercising this agency authority, the creditor must take into account the physical and mental readiness of the debtors, explain the key terms and schedules of contracts to the debtors in advance unless there are urgent circumstances, and may not enter into contracts that explicitly contradict the debtors' expressed intentions. However, the debtors acknowledge that, due to the nature of entertainment activities, the creditor may not always be able to provide full details of contracts in advance or allow sufficient time for review. If the creditor's staff informs the debtors verbally or in writing (including text messages and SNS messages, but not limited to these) of the key terms and schedule of a contract, and the debtors do not respond within 24 hours or proceed with fulfilling the contract themselves, they may not claim a violation of this clause by the creditor. Accordingly, when expressing their opinions under this clause, the debtors shall fully respect the creditor's unique management authority, expertise, and planning capabilities, ensuring alignment with the purpose of this exclusive contract. They shall not arbitrarily reject the contract's terms and schedule or request modifications without objective and reasonable justification.

3. ____
   
   

4. If a third party infringes upon or obstructs the debtors' entertainment activities, the creditor shall take necessary measures to eliminate such infringement or obstruction.
   
   

5. The creditor may not demand any actions that would infringe upon or risk infringing upon the debtors' privacy or personal rights beyond their entertainment activities or preparation for entertainment activities under this exclusive contract. The creditor may also not demand any unjust monetary payments.

Article 6: Respondents’ General Rights and Obligations

6. Respondents cannot independently negotiate or sign contracts with third parties that are similar to or conflict with this Exclusive Contract. They must inform the petitioner within three days if they receive external offers.

Article 8: Trademark Rights

1. During the contract period, the petitioner may register and use the respondents' names, stage names, nicknames, and other identity-related attributes for trademarks and intellectual property purposes.

Article 9: Publicity Rights

1. The respondents grant the petitioner commercial rights to use their names, images, voices, and other identity-related attributes for entertainment and business purposes, including sublicensing to third parties.

Article 10: Ownership of Content

1. "Content" includes:
   
   

   • Works created by the petitioner or designated third parties using the respondents’ intellectual property.
     
     

   • Works co-created by respondents and the petitioner.
     
     

   • Digital artist content.
     
     

   • Any other materials unrelated to the respondents' intellectual property belong solely to the petitioner.

Article 11: Protection Against Rights Infringement

If third parties infringe on the petitioner's rights under Articles 8–10, the petitioner may take legal action, and the respondents must cooperate.

Article 13: Warranties

1. The petitioner guarantees that it possesses the necessary human and material resources to fulfill its management obligations.

Article 15: Termination or Cancellation of the Contract

1. If either the creditor or the debtors violate any terms of this exclusive contract, the non-breaching party shall first request the breaching party to rectify the violation within a 14-day grace period. If the violation is not corrected within this period, the non-breaching party may terminate or cancel the contract and claim damages. However, termination or cancellation of the contract shall only be permitted in cases where a significant obligation under this contract has been violated.
   
   

2. Both parties acknowledge and agree that the creditor has invested a significant amount of time and substantial costs into the debtors’ entertainment activities. Considering these investments, the contract term was determined accordingly. Given past cases of exclusive contract terminations, the parties recognize that if the debtors fail to fulfill the agreed-upon contract period and unilaterally terminate the contract, the creditor may suffer irreparable financial losses, including the inability to recover any of the investment made during the remaining contract period. In this context, if the creditor has duly fulfilled its key contractual obligations, but the debtors unilaterally terminate the contract before the contract period ends or intentionally violate key contractual terms with the purpose of terminating the contract, the debtors agree to pay the creditor a penalty fee in addition to the damages stipulated in Clause 1 of this article.
   
   Penalty Fee Calculation:
   
   

   • The amount shall be calculated by multiplying the average monthly revenue generated during the last two years of the contract (only considering months in which revenue was actually earned) by the remaining months of the contract term as of the termination date.
     
     

3. If the debtors violate their obligations under Article 6, Clause 6 of this contract, it shall be presumed that they have acted with the intent of unilaterally terminating the contract.

<Footnote 1>

A. Background of the Debtors' Activities

1. The debtors debuted as the girl group "X" on July 22, 2022, and released their first album [Album Name] on August 1, 2022. On its release day, the album sold 262,815 copies, setting the record for the highest first-day sales of a debut album by a female idol group.

2. The debtors’ second album, [Album Name], released in 2023, achieved great commercial success, including debuting at No. 1 on the Billboard [Chart Name].

B. Business Agreement between the Creditor and AB

1. On November 12, 2021, the creditor signed a Business Unit (BU) Support Service Outsourcing Agreement with AB, referred to as the BU Agreement.

2. Relevant sections of this agreement pertain to the current dispute.

C. Management Restructuring by the Creditor

1. On August 27, 2024, the creditor removed AD as its CEO and appointed B as the new CEO.

2. On November 20, 2024, AD resigned from the board of directors of the creditor.

D. Termination Notice Sent by the Debtors

1. On November 13, 2024, the debtors sent a certified letter to the creditor citing various grievances, including:
   
   

   • A phrase in AB's May 10, 2023, Music Industry Report that stated: "Abandon X and start fresh."

   • A statement by a manager from an AB-affiliated company, telling Debtor L to "ignore it."

   • Disparaging remarks by an AB PR representative about X's achievements.

   • The leak of photos and videos from the debtors' trainee days.

   • The undervaluation of X's achievements due to AB's "album pushing" practices.

   • A dispute between AJ and the creditor over supervision by AG.

   • An attempt by AK (another AB affiliate) to replace or undermine X’s unique identity by debuting a new girl group, AH.

   • The possible return of AD as CEO of the creditor.

2. The debtors demanded the rectification of these issues within 14 days, citing Article 15, Clause 1 of the exclusive contract.
   
   

3. The creditor received the letter on November 14, 2024.
   
   

E. The Creditor's Response and the Debtors' Press Conference

1. On November 28, 2024, at 16:00, the creditor sent a certified letter in response to the debtors' grievances.

2. At 18:49, the creditor sent an email with the same content.

3. However, at 20:30, the debtors held a press conference, stating:

   • "Neither AB nor the creditor has shown any willingness to improve the situation or address our concerns."

   • "The creditor has neither the intention nor the ability to protect X."

   • The debtors declared their contract terminated.

4. At 00:01 on November 29, 2024, the debtors sent an email officially notifying the creditor of contract termination as of November 29, 2024.

F. Legal Action by the Creditor

1. On December 3, 2024, the creditor filed a lawsuit (Seoul Central District Court 2024 GaHap113399) against the debtors, seeking a confirmation of the validity of the exclusive contract.

2. Summary of the Creditor’s Claims

1. The debtors’ termination notice is invalid, meaning the creditor still holds management rights over them under the exclusive contract.

2. Despite this, the debtors have engaged in independent entertainment activities, including:

   • Negotiating solo advertising contracts.

   • Planning overseas concert performances without the creditor's involvement.

3. If this situation continues, the creditor will suffer irreparable financial harm beyond monetary compensation.

4. Allowing the debtors to unilaterally deny the agency’s management rights could destabilize the entire K-pop industry and harm third parties who have business agreements with the creditor.

5. The court should issue an injunction to prevent the debtors from engaging in independent activities.

3. Summary of the Debtors’ Claims

1. The creditor severely breached the exclusive contract, irreparably destroying trust between both parties.

2. Due to these breaches, the debtors had valid grounds to terminate the contract, meaning the creditor has no legal claim to an injunction.

3. If the court grants the injunction, the debtors will suffer serious harm, including:

   • Violation of their right to work.

   • Infringement on their personal rights.

   • Severe mental distress.

4. In contrast, the creditor’s claims revolve around monetary losses, which can be compensated financially.

5. Therefore, the injunction request should be denied.

4. Grounds for Contract Termination by the Debtors

A. Breaches of the Exclusive Contract

1. The creditor removed AD as CEO, preventing him from continuing as the producer for the debtors, violating Articles 1, 2, and 5 of the contract.

2. On April 25, 2024, AL (then CEO of AB) stated:

   • "We plan to give the debtors an extended break."

   • "We are assigning them a new producer, which will take 18 months."

   • The creditor took no corrective action, violating Articles 1, 2, and 5.

3. The creditor caused a dispute with AJ, leading to the deletion of the debtors’ work and blocking future collaborations, violating Articles 1, 2, and 5.

4. AB's May 2023 report suggested "abandoning X", and the creditor failed to respond, violating Articles 1, 2, and 5.

5. AB and its affiliate AK debuted AH, a group similar to X, undermining X’s uniqueness. The creditor failed to act, violating Articles 1, 2, 5(4), and 11.

6. A manager from AK told Debtor L to "ignore" a situation, but the creditor failed to protect them, violating Articles 2(2) and 11.

7. The debtors' trainee-era photos and videos leaked, yet the creditor did nothing, violating Articles 2(2) and 11.

8. An AB PR officer made disparaging comments about X, violating Article 5(1)(3).

9. AB’s "album pushing" practices led to undervaluation of X's success, yet the creditor took no action, violating Articles 5(4) and 5(1)(3).

10. The creditor launched a retaliatory audit against AD five days before X’s comeback, harming their reputation, violating Articles 2(2) and 5(1)(3).

11. On April 23, 2024, AB’s CSO AP stated:

• "We should destroy X’s brand value and take AD down with them."

• The creditor failed to respond, violating Articles 1, 2, and 5.

B. Irreparable Breakdown of Trust

1. The creditor and AB obstructed business opportunities, including:

   • Blocking brand ambassador offers.

   • Preventing collaborations with BA.

2. These violations, combined with the hostile environment created by the creditor, irreparably destroyed trust between both parties.

4. Judgment

A. Relevant Legal Principles

An exclusive management contract is an agreement in which an agency or manager provides services related to handling an entertainer’s professional activities. In return, the entertainer is obligated to conduct all entertainment activities exclusively through the agency or manager and is prohibited from engaging in such activities independently or through third parties. Given its nature, the success of an exclusive contract heavily depends on maintaining a high degree of trust between the contracting parties. The obligation of exclusivity imposed on the entertainer under such a contract cannot be substituted by another party.

If the trust between the parties is broken to the extent that the continuation of the contract can no longer be reasonably expected, it would be an excessive violation of the entertainer’s personal rights to force them to continue fulfilling the exclusivity obligation against their will. Therefore, if the mutual trust between the contracting parties collapses, the entertainer must be allowed to terminate the exclusive contract (refer to Supreme Court ruling 2019.9.10., Case No. 2017Da258237).

The burden of proof lies with the party claiming the termination of the contract, who must provide evidence that the contractual relationship has deteriorated to the point where its continuation is unfeasible (refer to Supreme Court ruling 2015.4.23., Case No. 2011Da19102, 19119).

B. Judgment on the Right to Preservation

It is established that the exclusive contract in question was executed between the creditor and the debtors. However, based on the record and the overall context of the hearings, the claims and materials submitted by the debtors do not sufficiently substantiate that the creditor violated essential obligations under the exclusive contract to the extent that it warrants termination. Moreover, there is insufficient proof that such violations have irreparably destroyed the mutual trust that forms the foundation of the contract. Therefore, the right to preservation in this case is acknowledged.

1) Grounds for Termination Due to Breach of Contract Under This Exclusive Agreement

(A) Grounds for Termination Listed in the Correction Items

(1) It appears that AD, the former CEO of the creditor, was deeply involved in the music activities of the debtors as the producer of group X, which consists of the debtors. However:

1. The dismissal of the creditor's CEO and the appointment of a new CEO are matters of the creditor’s business judgment and are not directly related to the production work for the debtors.
   
   

2. Even after being dismissed as the creditor’s CEO, AD was still able to participate in production work for the debtors as an internal director. In fact, the creditor proposed an internal director reappointment and a delegation agreement to AD, allowing him to continue working on production for the debtors until the expiration of their exclusive contract.
   
   

3. Despite this, AD rejected the creditor’s proposal around November 20, 2024, and voluntarily resigned from his position as an internal director.
   
   

4. It has been established that the creditor failed to recruit a producer to replace AD for several months after his dismissal as CEO. However, this appears to have been due to the creditor waiting for AD’s response to their proposal to continue his production work for the debtors.
   
   

5. There is no clause in this exclusive contract stating that the creditor must ensure that AD is responsible for production work for the debtors, nor does it seem that such an obligation was a fundamental motivation or purpose behind signing this exclusive contract.
   
   

6. The contract does not include any provisions allowing the debtors to terminate the agreement if AD is dismissed as CEO or does not perform production work for them.
   
   

7. The creditor appears to have sufficient capacity to recruit a suitable replacement producer for AD.
   
   

Considering these points, the mere fact that AD was dismissed as the creditor’s CEO does not necessarily mean that there was an immediate gap in production work for the debtors, nor does it prove that the creditor lacked the intent or ability to fulfill those responsibilities.

(2) It appears that AL, the former CEO of AB, made a statement around April 25, 2024, saying something to the effect of, "We are planning to give the debtors a long break. We want to assign them a new producer. It will take about 1 year and 6 months to assign a new producer."

However, this statement was made in the context of AB executives explaining the situation directly to the debtors' parents to prevent them from becoming unsettled amid reports of an audit of AD at AB. Therefore, it is difficult to conclude that this statement was intended to mean "We will temporarily suspend the debtors’ entertainment activities."

Additionally, AL, the former CEO of AB, was neither an executive of the creditor nor acting as the creditor’s auxiliary agent in carrying out any duties.

(3) According to the service outsourcing contract between the creditor and AJ, the production company for X’s music video:

• Ownership and intellectual property rights for deliverables produced under the contract belong to the creditor (Article 9, Clause 2).
  
  

• AJ cannot distribute or upload any deliverables from the contract to online platforms without prior written consent from the creditor (Article 10, Clause 2).

Despite this, on or around August 31, 2024, AJ uploaded a video related to X on its YouTube channel without the creditor's prior written consent. As a result, BA’s U.S. headquarters requested either:

1. The removal of the video, or
   
   

2. The re-uploading of the video after removing all BA-related branding.

Given these circumstances, the creditor’s legal action against AJ for contract violation can be seen as a legitimate exercise of its contractual rights.

Additionally:

• There is no sufficient evidence proving that AJ possessed an exceptional level of content production capability to the extent that replacing it with another music video production company would be impractical.
  
  

• Thus, the mere existence of a dispute between the creditor and AJ, which is not even a party to the exclusive contract in question, does not constitute a violation of the creditor’s obligations under the exclusive contract.

(4) A report contained the phrase “Abandon X and start fresh,” but:

1. This phrase was in a section discussing another girl group, AR, not X.

2. The context suggests it was part of a strategy discussion regarding AR’s competition with AS and AT.

3. The section on X in the same report contained content about its upcoming comeback and necessary preparations.

4. AD, then CEO, did not object to the report at the time.

5. Another AB industry report from May 17, 2023, noted that X still had the highest public favorability rating at 35%.

Therefore, the report does not indicate that AB intended to halt X’s activities or withdraw support. The creditor’s lack of objections does not constitute a contractual breach.

(5) While X and AH had some visual similarities in concept materials and photoshoots, the evidence does not sufficiently prove that AH copied X’s concept. Even if such copying had occurred:

1. A group’s “concept” is not explicitly covered under intellectual property rights in the exclusive contract.

2. AD, as CEO at the time, did not take legal action against AK (AH’s agency).

3. The creditor did take some action, including sending inquiries to AK and requesting security measures for X’s concept plans.

Thus, the creditor’s response does not constitute a material breach of contract.

(6) According to the records, on or around June 2, 2024, debtor L sent a KakaoTalk message to AD stating, "I heard the manager saying to just pretend not to notice and move on. I don’t remember the exact words, but it was something like that." On the same day, AD replied to debtor L with KakaoTalk messages saying, "Ignore her" and "This?"

Given these circumstances:

• It is difficult to conclusively determine that debtor L heard the statement "ignore her" directly from an AH manager under AB.
  
  

• On the same day, debtor L also sent an English KakaoTalk message to AD, stating that three AH members greeted debtor L in an uncomfortable or stiff manner. This suggests that the AH members did, in fact, greet debtor L.
  
  

• CCTV footage from AB’s headquarters on May 27, 2024, at 15:23, shows three AH members entering the building and bowing to greet debtor L.

Considering these points, the currently available evidence is insufficient to conclude that debtor L was subjected to remarks from the AH manager that would constitute an infringement on their personal rights.

Even if debtor L did hear the statement "just pretend not to notice and move on" from the AH manager, and it was simply not recorded on CCTV:

1. The creditor requested AB to review relevant CCTV footage shortly after receiving a complaint from the debtors’ parents around June 13, 2024. As a result, AB’s security policy team and building security team secured footage of debtor L encountering the three AH members on May 27, 2024, at 15:23.
   
   

2. AB’s security policy team and building security team continued searching for additional footage of interactions between debtor L and AH members at the creditor’s request.
   
   

3. Around August 14, 2024, the creditor’s deputy representative, AV, and employee, AW, personally viewed the May 27, 2024, CCTV footage alongside AK executives.
   
   

4. Around August 31, 2024, debtor L viewed the CCTV footage with AW. During this process, AW reportedly protested to AB’s building security staff, claiming that some of the CCTV footage was not properly preserved.
   
   

5. Since CCTV footage does not record audio, even if the incident was captured on video, the alleged "ignore it" remark would not have been recorded.

Considering these factors, it appears that the creditor took sufficient steps to verify the facts regarding debtor L’s statement. Therefore, it is difficult to conclude that the creditor failed to take necessary measures to protect debtor L.

(7)

1. When an article by AF featured photos and videos of the debtors during their trainee period, the creditor requested AF to remove the videos through AB's Digital Communications Office on July 23, 2024. As a result, two videos of the debtors' trainee period posted on AF’s YouTube account were deleted on July 27, 2024.
   
   

2. The creditor also took action on July 29 and July 30, 2024, to delete additional videos that had been reposted by unidentified individuals based on the original footage.
   
   

3. The creditor further requested AF to remove the captured images of the debtors from the article on October 23 and November 29, 2024. It appears that as a result, the faces of the debtors in the captured images were blurred.
   
   

4. Around November 14, 2024, the creditor hired an additional company to handle the removal of posts containing the debtors' trainee photos and videos.
   
   

5. On August 16, 2024, the creditor sent an email to AC inquiring about how AC's internal materials were used in AF’s article. On August 30, 2024, the creditor also sent an official letter to AF requesting clarification on how AF obtained and reported the debtors' trainee photos and videos.
   
   

6. Given that the circumstances of how the debtors' trainee photos and videos were leaked to AF remain unclear, and considering the above actions, the fact that the creditor has not taken civil or criminal action against AF or AC alone does not necessarily mean the creditor failed to take appropriate measures. Therefore, it is difficult to conclude that the creditor has violated a significant obligation under the exclusive contract in this case.

(8) It appears that AO, a PR representative of AB, made a phone call to a reporter from ◯◯ Newspaper and commented that "X's album sales in Japan were not as high as reported." The ◯◯ Newspaper article in question, published on July 17, 2024, stated that "X’s debut album in Japan sold over 1 million copies in ten days, demonstrating X’s strong performance in Japan. However, due to the conflict between AB and AD, AB's stock price hit a 52-week low." Since AO made the statement while explaining AB’s current stock price to an industry reporter, it is difficult to conclude that the remark was intended to demean or insult X beyond merely correcting facts about AB’s stock situation. Furthermore, AB distinguishes between artist PR and corporate PR, and AO, as AB’s corporate PR representative, was responsible for ensuring accuracy in stock-related reports. Therefore, it is difficult to view AO’s statement as being made in the course of supporting or assisting X’s entertainment activities as the creditor’s agent.

(9) Additionally, whether there was a practice of "album bulk buying" involving artists under AB or its affiliated companies needs to be determined through a thorough examination of evidence and careful deliberation in the main proceedings. Based on the materials submitted so far, it is difficult to definitively conclude that AB or its affiliated companies engaged in such a practice beyond mere allegations. Therefore, it is also difficult to assert that the creditor was obligated to take measures to prevent the debtors' achievements from being undervalued due to such alleged album bulk buying practices.

(B) Additional Grounds for Termination Not Listed in the Corrective Measures of This Case

(1) Unlisted Grounds for Termination Claimed by the Debtors

The debtors, in addition to the grounds for termination listed in the corrective measures, have added new claims, including:

• AB obstructing BA collaborations and luxury brand ambassador opportunities
  
  

• AB’s retaliatory audit against AD
  
  

• Statements made by AP, AB’s former CSO

However, the debtors did not first request corrective action for these matters as required under the exclusive contract.

According to Article 15, Clause 1 of the exclusive contract:

• Even if the creditor violates the contract, the debtors must first provide a 14-day grace period for the creditor to correct the violation.
  
  

• Only if the violation is not corrected within that period can the contract be terminated.

Since the debtors did not request corrective action for these new claims, they cannot be considered valid grounds for termination under the exclusive contract.

(2) The Debtors’ Counterargument

The debtors argue that these unlisted termination grounds were inherently impossible to rectify, and therefore, they should be able to terminate the contract without prior corrective requests.

However, based on the submitted materials, there is insufficient evidence to prove that these claims were impossible to rectify, unlike the listed corrective measures.

Thus, the debtors’ argument lacks merit.

(3) Even Without a Corrective Request, the New Grounds Alone Are Insufficient for Termination

• AB’s audit of AD was not conducted to harm the debtors' entertainment activities. Instead, it appears to have been conducted to prevent AD from taking control of the company or removing the debtors from AB’s control.
  
  

• Although media reports on the audit emerged, there is no clear evidence that the creditor intentionally leaked these reports to damage the debtors' public reputation.

Regarding AP’s alleged statement:

• AX, the former vice president of the creditor, submitted a petition stating that on April 23, 2024, AP told AX, "I am considering damaging X’s brand value to take down both AD and X."
  
  

• However, no other objective evidence supports AX’s statement.
  
  

• Even if AP did make such a statement, AP was not an executive of the creditor nor an agent acting on behalf of the creditor.
  
  

Thus, this claim alone cannot be considered a breach of the exclusive contract by the creditor.

(2) Termination Due to Breakdown of Trust

(A) The Debtors’ Argument

The debtors claim that, in addition to contractual violations, AB’s interference in their BA collaborations and luxury brand ambassador opportunities constitutes a breakdown of trust, justifying termination.

However:

• As seen earlier, the debtors failed to provide sufficient evidence of contract violations.
  
  

• There is insufficient proof that AB actively obstructed their entertainment activities in the way they allege.
  
  

Additionally, the BA collaboration rejection occurred in March 2022, before the exclusive contract was even signed.

• Since the contract was signed after this event, it cannot be considered a cause of trust breakdown between the parties.
  
  

Other claimed termination grounds occurred between January and October 2023, when AD was still the CEO of the creditor.

• During this period, the debtors did not raise any objections regarding trust issues.
  
  

• Even if AB acted inappropriately, this alone is insufficient to prove an irreparable breakdown of trust between the creditor and the debtors.
  
  

(B) Actions Following the Change in the Creditor’s Leadership

• The creditor fulfilled its key obligations, including settlements.
  
  

• The debtors did not raise concerns about contract violations or trust issues until May 31, 2024, when the creditor’s board members changed.
  
  

From May 31, 2024, the debtors began raising contractual issues and, on November 13, 2024, right before AD resigned from the board, they suddenly:

1. Requested improvements to the corrective measures
   
   

2. Threatened to terminate the contract if the issues were not resolved
   
   

Moreover:

• Before the 14-day grace period stipulated in Article 15, Clause 1 had expired, the debtors held a press conference announcing contract termination.
  
  

• As soon as the grace period ended, they formally notified the creditor of termination and cut off all communication.

Given these facts, it appears that the creditor was prevented from fulfilling its management duties due to the debtors’ unilateral termination notice.

(C) Lack of Clear Proof of Contractual Breach or Trust Breakdown

Even if there were some shortcomings in the creditor’s performance:

• There is no evidence that the creditor completely ignored corrective requests or repeatedly violated the contract over an extended period.
  
  

• Therefore, it is difficult to conclude that the foundation of trust in the exclusive contract had been irreparably broken.
  
  

(3) Necessity of a Preliminary Injunction

The creditor argues that a preliminary injunction is necessary, based on the following:

• The creditor invested significant resources into supporting the debtors' careers.
  
  

• If the debtors unilaterally terminate the contract after just two years, the creditor will suffer substantial financial losses.
  
  

• Even if the creditor seeks monetary compensation, proving the exact amount of damages will be highly challenging.
  
  

• The debtors were aware that unilateral contract termination could cause irreparable damage to the creditor.
  
  

• If the debtors continue their entertainment activities under a new group name, it could severely damage:
  
  

  • The brand value of ‘X’
    
    

  • The creditor’s reputation as a management company
    
    

• The creditor was established solely to manage the debtors, and they remain its only artists.
  
  

  • If the debtors leave, the creditor’s survival itself may be at risk.
    
    

• Despite the contract, the debtors plan to independently participate in an overseas concert on March 23, 2025, and release a new song without the creditor’s approval.

Given these factors, the court finds that a preliminary injunction should be granted before the final ruling.

(4) Conclusion

Since the debtor’s contract termination lacks valid grounds, the court grants the creditor’s injunction request.

Decision Date: March 21, 2025
Presiding Judge: Kim Sang-hoon
Judges: Jang Cheon-soo, Oh Jun-seok

[Appendix]

Scope of Activities Under the Exclusive Contract

1. Musician Activities – Includes composing, lyric writing, performing, singing, and related appearances on broadcasts, events, and entertainment programs.
   
   

2. Commercial Activities – Includes negotiations and signing of advertising contracts, appearances in advertisements, and any commercial activities based on the artist’s public recognition.

[Footnotes]

1. Digital Artist Content – This refers to digital content that digitizes and commercializes the artists’ name, image, voice, motion, signature, and other identity-related elements using AI technology.
   
   

2. Album Pushing – The practice of artificially inflating the initial sales figures of an album by using distribution companies or foreign subsidiaries to manipulate sales data.