K-pop powerhouse Hybe’s multilabel system is being tested as it has locked horns with one of its sublabels, Ador.

Executives of Ador, the agency housing popular K-pop girl group NewJeans, began sending complaint emails to their parent company on April 3, about a week after the launch of Illit, a new girl group, by another Hybe sublabel, Belift Lab.

Shin Dong-hoon, vice president of Ador, demanded that Hybe CEO Park Ji-won and Belift Lab CEO Kim Tae-ho address the conflict of interest surrounding Illit's choreography and concept, which he alleged imitated those of NewJeans.

Min Hee-jin, CEO of Ador and the producer of NewJeans, joined the fracas by sending an email not only to Park and Hybe Chairman Bang Si-hyuk, but also to Hybe America CEO Scooter Braun on April 16, claiming that Hybe is causing “conflicts of interest between subsidiaries" by whitewashing Illit's plagiarism of NewJeans.

Industry insiders say the conflict between Ador and Hybe stems from Hybe's multilabel business format that pushes its sublabels to compete against each other.

“Going back to the debut of NewJeans, the group debuted in July 2022. This came just two months after Source Music, one of Hybe’s sublabels, launched girl group Le Sserafim. This meant that Source Music and Ador, which are both under the same banner, had to compete against each other. This situation seems to have built up into what's happening today, for Min to think she is not receiving enough support from Hybe,” an industry insider explained.

The conflict between Hybe and Ador became public when Hybe initiated an audit of Ador on Monday, claiming that Min had attempted a takeover of the sublabel.

Hybe also informed Min that she would be suspended and dismissed from the CEO position.

Min refuted the allegation, arguing that Hybe took action against her after she pointed out that the powerhouse's K-pop girl group Illit was an imitation of Ador's NewJeans.

Soon after, Hybe announced they had found a document they claim shows an Ador executive planning to sell Ador's shares to foreign private equity funds.

According to reports, the document is an Ador executive's memo from three months ago in which the initials of global private equity funds "G" and "P" are written and that Ador planned to attract outside investors.

Hybe suspects “G” to stand for the Government of Singapore Investment Corporation and “P” for Public Investment Fund, Saudi Arabia's sovereign wealth fund.

The document also included the sentence, “How to make Hybe sell its shares in Ador.”

The Ador executive involved refuted the alleged plan to attract buyers, saying that the document was not a formal document to be shared with other employees but just his personal note.

“What Hybe is calling a ‘document’ is just a memo saved on my laptop. I am deeply sorry to hear that Hybe is exaggerating this note as a document for a huge conspiracy,” the executive told a local media outlet on Tuesday.

Currently, Hybe holds an 80 percent stake in Ador, while Ador CEO Min and other executives hold the remaining 20 percent.

The ongoing conflict is seen as illustrating the limits of Hybe’s multilabel system.

"The powerhouse can continue pumping out new releases with artists housed by its sublabels to fill BTS' void. But when competition is exacerbated, these sublabels might lose their unique colors and come up with artists that are similar to successful artists from other labels,” said an industry insider.

“Conflict between the parent company and its sublabels cannot be avoided when one of the sublabels begins to accumulate power with the intellectual property of its hit artist," commented another industry insider.

Hybe CEO Park said in an email sent to Hybe employees on Tuesday that they will "continue to contemplate what to improve for the development of the multilabel system and what needs to be implemented for the growth and development of NewJeans and Illit."