Back near the start of this mess, the rather hilarious news dropped that Lee Soo Man had sued the company he founded, SM Entertainment. That move was essentially to prevent a takeover by Lee Sung Soo and Align Partners, who wished to ally with Kakao by issuing them new shares. As everything else in this internal war has gone on, that lawsuit loomed over all of it, and now Lee Soo Man has emerged victorious.
From his lawyers:
It clearly confirmed that the resolution by SM’s current management to issue new shares and convertible bonds was made in an unlawful attempt to influence the company’s control and governance.
Further, it opined that at the stage of merely drawing up a business strategy for the strategic alliance with Kakao, SM was not in a situation to raise funds worth around KRW 217.2 billion by issuing new shares and convertible bonds to Kakao in disregard of the preemptive rights of the existing shareholders. The Court also emphasized that when confronted with the imminent possibility of a dispute over management rights, the resolution by SM’s current management to issue new shares, etc. appears to have stemmed from their intent to weaken the largest shareholder’s control by increasing Kakao’s shares.
The preemptive right is given to each of the shareholders, and thus any individual shareholder, regardless of the number of shares held or voting rights, may independently file for an injunction against the issuance of new shares and convertible bonds.
The Court’s decision clearly confirmed that the resolution by SM’s current management to arbitrarily influence the control and governance of the company is deemed unlawful under the Korean Commercial Code. If SM’s current management further attempts to commit unlawful acts in the future, we will respond firmly by taking appropriate legal actions.
Lee Soo Man then wrote basically a love letter to HYBE‘s Bang Shi Hyuk, plus explaining the deal.
To my SM family whom I love, and the many people who love SM,
Ever since becoming a bushy-haired ballad singer in the 1970s, I have lived my entire life with the public. I received more than enough love as a singer and as an MC, and the singers I produced after becoming a producer have also received lots of love from the public. That’s why my apologetic heart about the recent happenings regarding SM is even greater.
When I was planning SM in 1989, I was young and a start-up. Because I enjoyed music, I thought about what system singers needed. I researched a western model of the music industry and established SM’s corporate structure. Korean-style pop and the world of idols were achieved from the combination of developed business models and Korean-style talent development models. The achievements of K-pop made around the world by SM, alongside JYP, YG, HYBE, and more, is a miracle and blessing to Korea.
Meanwhile, from the time of Hyun Jin Young to H.O.T., BoA, TVXQ, Super Junior, Girls’ Generation, SHINee, EXO, Red Velvet, NCT, and aespa, my youth has also gone by.
SM’s “post-Lee Soo Man” [period] was my long-term concern. Entertainment is a world of creativity. As I am not passing SM down to my children or relatives, I believe I have to give it up to the industry’s “best” who can make it more prosperous. I’ve said that if there’s a governance issue within SM, it has to be improved, and if we need a professional manager, they should be in charge no matter the cost.
To me, “best” is producing. Producing is a 24/7 world of passion and creativity where you must endure endless failures until the birth of a star. Behind a star’s performance, that runs into fans’ hearts and creates their cheers, tears, emotions, and hope, is a world of producers who discovered and raised that star. If there is no public, there is no star, and if there is no star, there is no producer, and if there is no producer, the music industry cannot succeed. This is also true in reverse.
The past two years have been a time to find the “best” that most suits SM. On the other hand, I’ve urged current management to prepare for an SM era without Lee Soo Man. This is because I have already decided to step down from the SM stage. In addition to HYBE and Kakao, funds, large corporations, overseas global companies, and more wanted SM and sought me out.
To me, “the best” was HYBE. Although they were SM’s competitors, the success of BTS is a source of price for the whole country. As a music producer like me, HYBE’s chairman Bang Si Hyuk is someone who’s experienced a time of struggle. He’s someone who’s experienced eating snacks as meals with aspiring singers, being buried in the practice room, and wandering in all directions in search of investors. Just like me, he lived for music and created the record-breaking BTS. I felt that he treated his artists with the same affection as me. This was the reason for my decision, which many people were curious about.
As I wrap up the first part of my life as SM’s champion, I am now moving on to part two. My “next” is a place where technology meets culture. I am walking with heavy footsteps towards that place.
This is to not only SM’s family, but to its current management.
I do not regret the time I spent with everyone.
To me, SM was a challenge, my happiness, and a blessing.
I also want to share this with the artists I was with.
After meeting you, who were all full of dreams, we created music while laughing and crying together in those bittersweet times. You, who poured all your energy, from your fingertips to your feet, into stage-focused performances, were actually my teachers. I respect you, I am proud, and I thank you.
Well, I guess I’d be nice to anybody who gave me the kind of golden parachute that HYBE did compared to simply cutting him off entirely like the Align Partners side of things was planning to. It should be interesting to see how much in the background Lee Soo Man really is and whether his ideas continue on with SME if this goes through, especially given that while he won’t technically have a role, he’ll have sympathetic board members installed now, business with the company overseas, and obviously ties with Bang Shi Hyuk.
Unfortunately, this drama may now be winding down a bit, though every time I’ve thought that in the past something even crazier has come out.
Anyway, a lot of people in the comments of these recently have seemed increasingly flustered about this mess, saying that they don’t care or don’t understand. That’s fine, I don’t think you have to follow this closely, as the whole point is basically that all of these companies are the same and share the same ethic at the end of the day, which is to extract every dollar out of their artists, along with you and me. It’s just entertaining to some (like me) to watch this all play out publicly, and for them to have to admit as much officially because their money is at stake and that’s always the most important thing to them.