A Delaware judge ruled that Krafton improperly removed the CEO and leadership team of Unknown Worlds Entertainment and must restore their control over the studio. The decision directly impacts Subnautica 2, giving reinstated CEO Ted Gill authority over the game’s Early Access release.
The Court of Chancery issued a 96-page opinion concluding that Krafton violated the terms of its acquisition agreement when it fired Unknown Worlds’ key employees and attempted to seize operational control of the studio. The court ordered Gill reinstated and invalidated Krafton’s management changes.
The ruling also extended the earnout window tied to the acquisition. Unknown Worlds leadership can now earn up to $250m in performance-based payouts through September 15, 2026, with the possibility of further extensions. Krafton had attempted to eliminate this obligation by removing the leadership team.
Court documents reveal that Krafton’s CEO consulted ChatGPT after internal warnings that firing the team wouldn’t eliminate the earnout and would create legal risk. The opinion describes a “Project X” task force and a takeover strategy that included securing control points like publishing access and code repositories. Krafton then carried out many of these recommendations.
The dispute arose as Subnautica 2 approached its Early Access launch window. Krafton acquired Unknown Worlds with an earnout structure that tied additional payments to the studio’s performance. As the milestone neared, the publisher grew concerned about the cost.
After removing Gill, Krafton installed Steve Papoutsis as part-time CEO. According to the court opinion, Papoutsis already ran another Krafton subsidiary and had neither played an Unknown Worlds game nor overseen early access development before his appointment.
The judge found that Krafton knew about and accepted that Unknown Worlds’ founders had stepped back into limited roles. The publisher’s later complaints about reduced founder involvement did not constitute valid cause for termination under the agreement.
The ruling represents the first phase of the litigation. Additional proceedings on compensatory and punitive damages remain pending. The court’s decision focused on reinstating leadership and restoring contractual rights rather than calculating final financial remedies.
