1) The Creditor dismissed AD from the position of Representative Director of the Creditor, thereby preventing AD from performing producing duties for the Debtors. This constitutes a violation of Articles 1, 2, and 5 of the Exclusive Contracts in this Case.

2) AL, who was AB’s CEO, stated on April 25, 2024: “I am going to give the Debtors a long vacation. I am going to assign them a new producer. I am going to assign them a new producer, but it will take 1 year and 6 months.” Nevertheless, the Creditor took no particular measures in response. This constitutes a violation of Articles 1, 2, and 5 of the Exclusive Contracts in this Case.

3) The Creditor provoked a dispute with AJ, which had been an excellent collaborator, caused the Debtors’ creative works to be deleted, and made future additional collaboration with AJ impossible. This constitutes a violation of Articles 1, 2, and 5 of the Exclusive Contracts in this Case.

4) In May 2023, AB prepared the Report in this Case containing the statement “Abandon X and set up a new plan.” Nevertheless, the Creditor took no particular measures in response. This constitutes a violation of Articles 1, 2, and 5 of the Exclusive Contracts in this Case.

5) AB and its affiliate AK debuted “AH,” a female idol group similar to X composed of the Debtors, thereby infringing upon the Debtors’ uniqueness and attempting to replace the Debtors with AH. Nevertheless, the Creditor took no measures in response. This constitutes a violation of Articles 1, 2, 5(4), and 11 of the Exclusive Contracts in this Case.

6) Debtor L heard a statement from an AH manager under AK, an AB affiliate, saying “Pretend not to see L and ignore her.” Nevertheless, the Creditor took no measures to protect Debtor L. This constitutes a violation of Articles 2(2) and 11 of the Exclusive Contracts in this Case.

7) Although photographs and videos of the Debtors from their trainee period were leaked to AF through AB or AC, an AB affiliate, the Creditor took no measures. The Creditor thus violated Articles 2(2) and 11 of the Exclusive Contracts in this Case.

8) AO, an AB PR representative, while in the position of the Creditor’s performance assistant, made statements disparaging and insulting X’s achievements. Nevertheless, the Creditor took no particular measures in response. This constitutes a violation of Article 5, Paragraph 1, Item 3 of the Exclusive Contracts in this Case.

9) A situation arose where the Debtors’ achievements were undervalued due to the “album pushing” practice regarding albums of artists under AB. Nevertheless, the Creditor took no necessary measures regarding this situation. This constitutes a violation of Article 5(4) and Article 5, Paragraph 1, Item 3 of the Exclusive Contracts in this Case.

10) The Creditor or AB commenced a retaliatory audit against AD with the Debtors’ comeback only 5 days away on April 22, 2024, and had this extensively reported in the media, thereby creating negative public opinion toward the Debtors. This constitutes a violation of Articles 2(2) and 5, Paragraph 1, Item 3 of the Exclusive Contracts in this Case.

11) AP, who was AB’s CSO, stated on April 23, 2024: “I am thinking of damaging the X brand value and taking down AD and X together.” Nevertheless, the Creditor took no particular measures in response. This constitutes a violation of Articles 1, 2, and 5 of the Exclusive Contracts in this Case.

1) Grounds for Termination Due to Breach of Contract Under the Exclusive Contracts in this Case

A) Grounds for Termination Stated in the Remediation Matters in this Case

(1) It appears that AD, who was the Creditor’s Representative Director, was deeply involved in the Debtors’ music activities as a producer for X, composed of the Debtors. However, ① the dismissal of the Creditor’s Representative Director and appointment of a new Representative Director is a matter of the Creditor’s management judgment and is not directly related to producing duties for the Debtors; ② even though AD was dismissed from the position of Representative Director of the Creditor, it appears that AD could still participate in producing duties for the Debtors as an inside director, and in fact, it appears that the Creditor proposed to AD a service entrustment contract for AD’s reappointment as inside director of the Creditor and continued producing duties for the Debtors until the expiration date of the Debtors’ exclusive contract period; ③ nevertheless, it appears that AD rejected the Creditor’s above proposal on November 20, 2024 and voluntarily resigned from the position of inside director of the Creditor; ④ while it is established that the Creditor failed to secure a producer to replace AD for several months after dismissing AD from the position of Representative Director of the Creditor, this appears to be because the Creditor was in the process of proposing producing duties for the Debtors to AD and waiting for AD’s response; ⑤ it is also difficult to view that the Exclusive Contracts in this Case stated or that it was the motive or purpose of entering into the Exclusive Contracts in this Case that the Creditor must necessarily have AD perform producing duties for the Debtors; ⑥ there is no agreement that the Debtors may terminate the Exclusive Contracts in this Case if AD is dismissed from the position of Representative Director of the Creditor or does not perform producing duties for the Debtors; ⑦ it appears that the Creditor has sufficient capability to secure a producer to replace AD. Considering these factors together, it is difficult to conclude, solely from the fact that AD was dismissed from the position of Representative Director of the Creditor, that a gap has arisen in producing duties for the Debtors or that the Creditor has no plan or capability to perform such duties.

(2) It appears that AL, who was AB’s CEO, made a statement to the effect that “I am going to give the Debtors a long vacation. I am going to assign them a new producer. I am going to assign them a new producer, but it will take 1 year and 6 months” on April 25, 2024.^{Note 2} However, the above statement appears to have been made in the process of AB executives directly explaining the situation at the time to the Debtors’ parents in order to prevent the Debtors’ agitation at the time when the facts of AB’s audit of AD were being reported. Therefore, it is difficult to conclude that this was a statement to the effect of “suspending the Debtors’ entertainment activities.” Furthermore, AL, who was AB’s CEO, was not an executive of the Creditor, nor did AL perform duties as the Creditor’s performance assistant.

(3) According to the service entrustment contract entered into between the Creditor and AJ, the music video production company for X, ownership and intellectual property rights in the outputs produced through the performance of such contract belong to the Creditor (Article 9, Paragraph 2), and AJ may not distribute or post the outputs produced through such contract on online media without the Creditor’s prior written consent (Article 10, Paragraph 2). Nevertheless, on August 31, 2024, AJ posted X’s “<Video Name>” video on YouTube operated by AJ without the Creditor’s prior written consent. As a result, it appears that AJ received a request from BA’s U.S. headquarters to remove the video or to re-upload it after removing all BA branding. Therefore, the Creditor’s taking of legal action against AJ, which violated the above service entrustment contract, can be viewed as an exercise of rights under the service entrustment contract, and it is difficult to view, solely from these circumstances, that the Creditor violated material obligations under the Exclusive Contracts in this Case. Furthermore, unless circumstances such as AJ having exceptional content production capabilities that would be difficult to replace with another music video production company are sufficiently established, it is also difficult to view, solely from the fact that there was a dispute between the Creditor and AJ—which is not even a party to the Exclusive Contracts in this Case—that the Creditor violated material obligations under the Exclusive Contracts in this Case.

(4) It is true that the Report in this Case contained the statement “Abandon X and set up a new plan.” However, ① the above content was stated in an item concerning “AR,” a female idol group under another AB affiliate; ② examining the context before and after the above content, it appears to have been made in the process of presenting a success strategy for AR, pointing out that AR had been blocked by AS from achieving No. 1 on music charts and that AT was closely following AR in album sales, and emphasizing that it would be strategically necessary to be classified as “AU, AR, AT, AS” rather than “X, AS, AR”; ③ the item concerning X in the Report in this Case merely contained general content regarding X’s music activities, such as “It would be good to have some issues for gentle warm-up before X’s comeback,” and even proposed preparation items for X’s comeback, stating “As competition among girl groups intensifies, X may also face all kinds of unreasonable criticism during the comeback period, so preparation is necessary”; ④ AD, who was the Creditor’s Representative Director at the time, received the Report in this Case but did not raise any objection to AB regarding the Report in this Case; ⑤ AB’s May 17, 2023 Music Industry Report contained the statement “In the celebrity preference survey, X is still No. 1 at 35%. They are still a team with high general public appeal, and it is important to continue building an undefeated momentum while making clear use of this.” Considering these factors together, it is difficult to view that AB stated in the Report in this Case that they would suspend the Debtors’ activities or stop supporting the Debtors. Therefore, even if the Creditor did not take measures such as protesting to AB regarding the Report in this Case, it is difficult to view that the Creditor violated material obligations under the Exclusive Contracts in this Case.

(5) While it is confirmed that there are some similarities between X and AH in their respective planning proposals and pictorials, etc., it is difficult to conclude, based solely on the evidence submitted, that it has been sufficiently established that AH copied X’s concept. Even assuming that AH copied X’s concept, ① it is difficult to conclude that a female idol group’s “concept” is included in the trademark rights, publicity rights, or intellectual property rights defined in the Exclusive Contracts in this Case; ② when AD was serving as the Creditor’s Representative Director, the controversy over AH’s concept copying was first raised, but even AD did not take legal action against AK, which was AH’s agency at the time; ③ AD, who was the Creditor’s Representative Director, sent emails to AB on April 3, 2024 and April 16, 2024 to the effect that “AK and AB debuted AH through planning that imitated X,” and also issued position statements and held press conferences on April 22, 2024 and April 25, 2024, so it appears that the Creditor took measures to some extent regarding the above controversy; ④ in response to the Debtors’ requests out of concern about leakage of trade secrets, the Creditor also sent an email to AK requesting confirmation of the facts on November 18, 2024, and an email to AB’s security team requesting security management of X’s planning proposals on November 25, 2024. Considering these factors together, it is difficult to view that the Creditor violated material obligations under the Exclusive Contracts in this Case by failing to take any measures regarding the AH concept copying controversy.

(6) According to the records, it is established that on June 2, 2024, Debtor L sent a KakaoTalk message to AD saying “I heard a manager say something like just pretend not to know and pass by. I don’t remember exactly those words, but it was roughly that kind of thing,” to which AD responded on the same day by sending KakaoTalk messages saying “Ignore her” and “This one?” to Debtor L. It is difficult to conclude that Debtor L heard the statement “Ignore her” from an AH manager under AB affiliate at that time; Debtor L sent an English KakaoTalk message to AD on the same day to the effect that 3 AH members had greeted Debtor L uncomfortably or stiffly, which indicates that 3 AH members did greet Debtor L at that time; according to AB’s CCTV footage at the time, it is confirmed that 3 AH members bowed and greeted Debtor L when entering the AB building at 3:23 PM on May 27, 2024. Considering these factors together, based solely on the evidence submitted to date, it is difficult to conclude that it has been sufficiently established that Debtor L heard statements from the above AH manager that would infringe upon Debtor L’s personal rights, such as “Ignore her.” Even assuming that Debtor L heard the statement “just pretend not to know and pass by” from the above AH manager and that this scene was simply not recorded on the CCTV footage, ① immediately after receiving a complaint from the Debtors’ parents on June 13, 2024, the Creditor requested AB to check the relevant CCTV footage, and as a result, AB’s Security Policy Team and Building Security Team secured the CCTV footage of Debtor L encountering 3 AH members at 3:23 PM on May 27, 2024; ② it appears that AB’s Security Policy Team and Building Security Team continued searching for footage of additional encounters between Debtor L and AH members at the Creditor’s request; ③ AV, who was the Creditor’s Vice President, and AW, who was an employee of the Creditor, directly viewed the May 27, 2024 CCTV footage together with AK executives on August 14, 2024; ④ Debtor L directly viewed the above CCTV footage together with AW on August 31, 2024, and during this process, AW protested to an AB Building Security Team employee that some parts of the CCTV footage were not properly preserved; ⑤ since CCTV footage does not record audio, even if the scene at the time was recorded on CCTV footage, the above “Ignore her” statement would not have been recorded. Considering these factors together, it appears that the Creditor took sufficient measures to confirm the facts based on Debtor L’s statement at the time. It is difficult to evaluate this as the Creditor failing to take measures to protect Debtor L.

(7) ① When photographs and videos of the Debtors from their trainee period were posted in an AF article, on July 23, 2024, the Creditor requested AF, through AB’s Digital Communication Office, to cease posting the videos of the Debtors from their trainee period, and on July 27, 2024, took measures to have 2 videos of the Debtors from their trainee period posted on AF’s YouTube account deleted; ② the Creditor also took deletion measures on July 29 and 30, 2024 for videos derived from the above videos that were posted by unidentified persons; ③ on October 23 and November 29, 2024, the Creditor requested AF to delete even the screenshots of the videos from the Debtors’ trainee period remaining in the articles, and currently it appears that measures have been taken to blur the Debtors’ faces in the screenshots; ④ on November 14, 2024, the Creditor additionally retained a company to act as agent in taking measures to cease posting of the Debtors’ trainee period photographs and videos; ⑤ on August 16, 2024, the Creditor sent an email to AC requesting confirmation of how AC’s internal materials came to be used in an AF article, and on August 30, 2024, sent an official letter to AF to confirm the circumstances under which they obtained and reported the Debtors’ trainee period photographs and video materials; ⑥ it is difficult to view that the circumstances under which the Debtors’ trainee period photographs and videos were leaked to AF have been clearly identified to date. Considering these factors together, solely from the fact that the Creditor did not take civil or criminal action against AF or AC, it is difficult to view that the Creditor failed to take necessary measures regarding the leakage of the Debtors’ trainee period photographs and videos. Therefore, it is difficult to view that the Creditor violated material obligations under the Exclusive Contracts in this Case.

(8) It appears that AO, an AB PR representative, made a phone call to a reporter at a certain newspaper saying “X’s album sales in Japan were not as high as the article stated.” The July 17, 2024 article in the certain newspaper, for which AO requested corrections, contained content to the effect that “Although X’s Japan debut album sold more than 1 million copies in 10 days and X achieved good results in Japan, AB’s stock price closed at a 52-week low due to the conflict between AB and AD.” It appears that AO made the above statement in the process of explaining AB’s current stock price to an industry reporter. Therefore, it is difficult to conclude that the above statement went beyond correcting factual matters regarding AB’s stock price and constituted a statement disparaging or insulting X. Meanwhile, AB separates artist PR and corporate PR, and AO, as AB’s corporate PR representative, appears to have performed duties of correcting articles related to AB’s stock price to be factually accurate. Therefore, it is also difficult to view that AO made the above statement while supporting or assisting X’s entertainment activities as the Creditor’s performance assistant.

(9) Furthermore, whether there was a practice of “album pushing”^{Note 3} regarding albums of artists under AB or its affiliates needs to be determined through thorough investigation of evidence and careful deliberation on the merits, and based solely on the evidence submitted to date, it is difficult to conclude that AB or its affiliates definitely had such a practice of album pushing regarding albums of their artists, beyond the stage of allegations being raised. Therefore, it is also difficult to view that the Creditor should have taken measures to prevent the Debtors’ achievements from being undervalued due to such album pushing practice.

B) Grounds for Termination Not Stated in the Remediation Matters in this Case

(1) In this case, the Debtors have added the following as grounds for termination due to breach of contract under the Exclusive Contracts in this Case, in addition to the grounds for termination stated in the Remediation Matters in this Case: AB’s obstruction of BA collaboration and luxury brand ambassadorship; AB’s retaliatory audit of AD; and statements made by AP, who was AB’s CSO—without having gone through the process of demanding remediation from the Creditor. However, pursuant to Article 15, Paragraph 1 of the Exclusive Contracts in this Case, even if the Creditor violated its obligations under the Exclusive Contracts in this Case, the Debtors must first demand that the Creditor remedy the violation by setting a grace period of 14 days, and may terminate the Exclusive Contracts in this Case only if the violation is not remedied within such period. Therefore, the above grounds for termination, which did not go through the process of demanding remediation from the Creditor, are difficult to include as grounds for termination due to breach of contract under the Exclusive Contracts in this Case.

(2) In response, the Debtors argue to the effect that since the grounds for termination not stated in the Remediation Matters in this Case were originally incapable of being remedied, they can be asserted as grounds for termination of the Exclusive Contracts in this Case even though the Debtors did not demand remediation in advance. However, based solely on the evidence submitted, it is difficult to conclude that it has been sufficiently established that the grounds for termination not stated in the Remediation Matters in this Case were originally incapable of being remedied, unlike the grounds for termination stated in the Remediation Matters in this Case. Therefore, the Debtors’ above argument is without merit.

(3) Furthermore, even if the remediation demand procedure did not need to be followed for the above grounds for termination, as examined below, it is difficult to view that the Exclusive Contracts in this Case could be terminated based solely on those grounds for termination.

(A) The audit of AD by AB and the Creditor appears to have been conducted to prevent AD, who was the Creditor’s Representative Director at the time, from departing from AB’s control while taking the Debtors with him, or from exploring ways to independently control the Creditor himself, rather than to harm the Debtors’ entertainment activities. Although articles about the above audit were subsequently reported in the media, based solely on the evidence submitted, it is difficult to conclude that it has been sufficiently established that the Creditor caused this to be reported in the media, thereby creating negative public opinion toward the Debtors.

(B) It is established that AX, who was the Creditor’s Vice President, submitted a petition stating that “AP, who was AB’s CSO, said to AX on April 23, 2024 that ‘I am thinking of damaging the X brand value and taking down AD and X together.’” However, unless other objective evidence supporting the contents of AX’s petition is submitted, it is difficult to conclude, based solely on AX’s above petition, that AP made such a statement. Even assuming that AP made such a statement, AP, who was AB’s CSO, was not an executive of the Creditor, nor did AP perform duties as the Creditor’s performance assistant. Therefore, it is also difficult to view, based solely on the above statement, that the Creditor violated material obligations under the Exclusive Contracts in this Case.

2) Grounds for Termination Due to Destruction of Trust Relationship

A) The Debtors assert circumstances such as AB interfering with communications or activities regarding BA’s collaboration requests and luxury brand ambassador offers to the Debtors as grounds for termination due to destruction of trust relationship, in addition to the grounds for termination due to breach of contract under the Exclusive Contracts in this Case. However, sufficient prima facie showing has not been made regarding the grounds for termination due to breach of contract under the Exclusive Contracts in this Case, as examined above, and based solely on the arguments and evidence submitted by the Debtors to date, it is difficult to conclude that it has been sufficiently established that AB interfered with the Debtors’ entertainment activities in the manner alleged by the Debtors. Furthermore, according to the Debtors’ argument, AL, who was AB’s CEO, rejected BA’s collaboration proposal in March 2022, before the Debtors even entered into the Exclusive Contracts in this Case or debuted as “X.” Circumstances that occurred before the Exclusive Contracts in this Case were even entered into cannot be viewed as having destroyed the trust relationship between the Creditor and the Debtors after the Exclusive Contracts in this Case were entered into. The remaining grounds for termination occurred during the period from around January 2023 to around October 2023. During that period, AD, whom the Debtors trusted, was serving as the Creditor’s Representative Director, and in fact, it appears that the Debtors did not raise any particular issues with the Creditor during that period. Therefore, even if AB engaged in the above conduct as the Creditor’s performance assistant, it is difficult to view that the trust relationship between the Creditor and the Debtors was destroyed solely by such conduct.

B) The Creditor has performed most of its material obligations under the Exclusive Contracts in this Case, including settlement obligations, to the Debtors, and the Debtors did not raise any issues or demand remediation from the Creditor based on breach of the Exclusive Contracts in this Case or destruction of trust relationship until around May 31, 2024, when the Creditor’s directors other than AD, who had been the Creditor’s Representative Director, were replaced. However, from around May 31, 2024, when the Creditor’s directors were replaced as above, the Debtors began raising issues of breach of the Exclusive Contracts in this Case with the Creditor, and on November 13, 2024, just before AD resigned from the position of inside director of the Creditor, suddenly sent a notice to the Creditor demanding improvement of the Remediation Matters in this Case and stating that “if the Remediation Matters in this Case are not improved, we will terminate the Exclusive Contracts in this Case.” Moreover, the Debtors held a press conference announcing termination of the Exclusive Contracts in this Case even before the 14-day grace period pursuant to Article 15, Paragraph 1 of the Exclusive Contracts in this Case had expired, and as soon as the above grace period expired, sent a notice to the Creditor that they were terminating the Exclusive Contracts in this Case. Thereafter, the Debtors unilaterally refused to respond to contact from the Creditor. Considering these circumstances together, it also appears that the Creditor’s inability to perform management duties under the Exclusive Contracts in this Case was partially due to the Debtors’ unilateral notice of termination of the exclusive contract.

C) Even if the Creditor had some shortcomings in performing its obligations under the Exclusive Contracts in this Case, at the current stage where circumstances such as the Creditor failing to remedy the situation at all despite the Debtors’ demand for remediation, or the Creditor’s breach of obligations being repeated or prolonged for an extended period, have not been confirmed, it is also difficult to conclude that the trust relationship underlying the Exclusive Contracts in this Case has been destroyed to the point of no return due to the Creditor’s breach of the Exclusive Contracts in this Case.