Almost a year after Unknown Worlds CEO Ted Gill (alongside co-founders Charlie Cleveland and Max McGuire) was fired by Krafton, a Delaware Chancery Court judge has ordered his reinstatement.
Vice Chancellor Lori W. Will stated, “Judgment is entered in favor of Fortis [which represents the Unknown Worlds founders] on its Phase One claims. Krafton breached the EPA by terminating the Key Employees without valid Cause and by improperly seizing operational control of Unknown Worlds.”
The “resolution” from Krafton’s board on July 1st, 2025, has been “declared ineffective to the extent it infringes on Gill’s operational control right.” Not only will Gill be reinstated, but he’ll once again have “authority over the early access launch of Subnautica 2” with the publisher enjoined from firing him. If that wasn’t enough, all of the cofounders are again liable to collect the bonuses from the $250 million payout promised by Krafton as part of its agreement to acquire Unknown Worlds.
The payout collection period has been extended through to September 15th (with room for further extension, if necessary). Why did the court rule in favor of the co-founders? Originally, Krafton fired them for wanting to release Subnautica 2 into early access when it was deemed not ready. However, it later blamed them for “abandoning” Unknown Worlds for other projects and even accused them of stealing confidential data.
According to court documents (as outlined by Kotaku), “Krafton’s newly manufactured justifications for the terminations are pretextual. Cleveland and McGuire had taken on limited roles, but that was long known to and accepted by Krafton. As for the data downloads, the former employees were acting to protect the studio’s work product amid Krafton’s takeover attempt. They kept the data confidential and promptly returned it.
“The earnout formula is highly leveraged. If Unknown Worlds surpasses a revenue threshold of $69.8 million, Krafton must pay $3.12 for each additional dollar of revenue generated, up to the $250 million cap.”
If released by Q4 2025 and selling more than 1.67 million (by its models), the studio would have earned a total payout of $191.8 million (though $242.2 million would have been the “best-case scenario”). “These figures immediately captured the attention of [Krafton] CEO [Changhan] Kim,” wrote the judge. “Kim, who had personally led the acquisition of Unknown Worlds, felt that Krafton had overpaid. He feared that making an earnout payment would earn him a reputation as a ‘pushover.'”
Thus began its campaign, dubbed “Project X,” to fire the trio, including consulting with ChatGPT. Hilariously, even the latter advised it would be “difficult to cancel the earnout.”
Of course, this is only Phase One, and the court has yet to rule on any monetary damages. In a statement to Kotaku, Krafton said it “respectfully” disagreed with the recent ruling and is focused on “pushing out the newly updated version” of Subnautica 2 to players “as soon as possible.”
“Krafton puts players at the heart of every decision, and that will never change. Over the past several months, Krafton and the Unknown Worlds team have worked tirelessly to strengthen the game and prepare it for an Early Access release, with a continued focus on delivering the best possible experience for the Subnautica community. We look forward to pushing out the newly updated version as soon as possible for players.
“While we respectfully disagree with today’s ruling, we are evaluating our options as we determine our path forward. Today’s ruling does not resolve the former executives’ claim for damages or an earnout related to Subnautica 2, with further litigation still pending. In the meantime, Krafton’s immediate focus remains unchanged: delivering the best possible game to Subnautica’s fans.”
Amid all this, Subnautica 2 is currently planned to launch in 2026 for Xbox Series X/S (via Game Preview) and PC. It will also be available on day one for Game Pass.
