[비즈한국] It has been confirmed that HYBE352820 acquired stakes in U.S. companies that were in an "inactive" status due to tax delinquency without disclosing the arrears. HYBE’s subsidiary, Ithaca Holdings, acquired stakes in Void Music and Whalers, both U.S. limited liability companies based in Delaware, which had failed to pay required franchise taxes to the state of Delaware. While HYBE has listed these companies as "joint ventures and associates" in its disclosures, it did not reflect the delinquent tax amounts in their financial information.
Ithaca Holdings calls them 'associates'… why acquire stakes in inactive companies?
Void Music and Whalers were first disclosed as joint ventures and associates of HYBE in the semi-annual report for June 2021. HYBE acquired Ithaca Holdings, founded by Scooter Braun, through HYBE America. Subsequently, Ithaca Holdings disclosed that it had acquired a 50% stake in Void Music and a 40% stake in Whalers as part of its investments in joint ventures and associates. The acquisition cost for the Whalers stake was stated as 113 million won, but the acquisition amount for Void Music was not specified. However, it was noted that Ithaca Media Ventures, a HYBE subsidiary, had entered into a shareholders' agreement granting call and put options while investing in Void Music.
However, it has been confirmed that the corporate registration for Void Music and Whalers had been in an "inactive" status. They had accumulated fines and interest for failing to pay the annual franchise tax in Delaware. Void Music was in arrears for a total of $1,770 (approximately 2.46 million won) from 2019 to 2021, and Whalers was in arrears for a total of $1,167.50 (approximately 1.62 million won) from 2020 to 2022.
According to BizHankook's investigation, a complaint regarding this matter was filed with the Financial Supervisory Service (FSS) in early October. HYBE reportedly explained to the FSS that these were "companies in the process of liquidation." It was confirmed that the delinquent taxes for both Void Music and Whalers were paid following the filing of the complaint. Void Music paid its full tax arrears on November 11, and Whalers did so on November 5.
However, Whalers remains in an inactive status. An official from the Delaware Department of State explained to BizHankook, "On November 12, Void Music submitted renewal documents to resolve its inactive status after paying the taxes, but no renewal documents have been submitted for Whalers."
Why did Ithaca Holdings acquire stakes in companies that were "inactive" due to tax delinquency? HYBE stated to BizHankook, "We have nothing further to add regarding the companies beyond what has been disclosed as joint ventures and associates of Ithaca Holdings."
Suspicions of 'false disclosure' for failing to reflect tax arrears in financial statements
The state of Delaware collects an annual franchise tax from corporations established within the state. The tax is calculated based on authorized shares. The taxes that Void Music and Whalers failed to pay are understood to be these franchise taxes. Jang Geon, an attorney at BNL Law, explained, "Once a company becomes inactive due to tax delinquency, it is difficult to engage in normal economic activities because the inactive status is indicated on official documents."
The problem is that HYBE has not disclosed the tax delinquency in the financial information of Void Music and Whalers. From 2021 to the present, HYBE has listed the assets and liabilities of Void Music and Whalers as 0 won in the financial information section for its investments in joint ventures and associates. The delinquent tax amounts were not reflected in the financial data.
A U.S.-based accountant pointed out, "In principle, franchise tax arrears in Delaware should be reflected in financial statements. If this is realized belatedly, the disclosure should be corrected and the financial statements should be amended."
Meanwhile, HYBE identified Void Music's primary business as content and Whalers as a holding company, but no actual business activities could be found for either. There are no corporate records for them available with the U.S. Securities and Exchange Commission (SEC). In particular, information regarding Whalers' office address and registered agent is also absent.