Delaware Court Orders Reinstatement of Unknown Worlds Leadership as Legal Conflict With Krafton Reaches Fever Pitch

Delaware judge orders Krafton to reinstate Subnautica 2 developers and extends $250M bonus deadline, citing improper "Project X" takeover tactics.

By: AXL Media

Published: Mar 24, 2026, 6:37 AM EDT

Source: The information in this article was sourced from GamesIndustry.biz

A Decisive Judicial Strike Against Publisher Takeover

The legal battle between Krafton, Inc. and the original creators of the Subnautica franchise has culminated in a stinging defeat for the South Korean publisher. On March 16, 2026, Vice Chancellor Will of the Delaware Chancery Court ruled that Krafton breached its purchase agreement by terminating CEO Ted Gill, Charlie Cleveland, and Max McGuire without valid cause. The court found that Krafton’s "Project X" initiative was a calculated effort to seize control of the studio and avoid a massive $250 million "earnout" payment tied to the sequel's release. As a result, the court has ordered the immediate reinstatement of Ted Gill as CEO, effectively stripping Krafton-appointed Steve Papoutsis of his current authority.

The $250 Million "Earnout" at the Heart of the Conflict

The friction between the two entities stems from the 2021 acquisition terms, which included a $500 million initial price and an additional $250 million in potential performance-related bonuses. Krafton had publicly alleged that the former leadership "abandoned" the project to focus on personal films and scaled back the game’s scope to force a premature release. However, the court found these claims lacked merit, instead suggesting that Krafton sought to delay Subnautica 2 into 2026 specifically to bypass the bonus eligibility window. To remedy this, the judge has extended the bonus deadline to September 15, 2026, giving the reinstated team a renewed window to achieve their financial targets.

Allegations of Intellectual Property Theft and Secret Task Forces

The litigation has exposed a "messy" internal culture, with Krafton accusing the founders of downloading tens of thousands of sensitive documents—including Subnautica design files—prior to their termination. The publisher characterized this as a "theft" intended to facilitate self-publishing. Conversely, the founders alleged that Krafton formed a "secret task force" designed to either force a deal on the earnout or execute a hostile takeover. While Krafton attempted to use the data downloads as retrospective justification for the firings, the court rejected this defense, stating the publisher failed to prove the downloads constituted an independent basis for termination under the original contract.