In March, Subnautica 2 maker Unknown Worlds’ former CEO Ted Gill was reinstated after an order from the Delaware State Court of Chancery. Gill is one of three Unknown Worlds executives who have been fighting studio owner Krafton since July 2025. The group alleged that the South Korean company intentionally delayed Subnautica 2—and committed other misdeeds—to avoid an extra $250 million payout. Krafton disputed that claim. A high-profile legal battle ensued.
Following the executives’ original complaint, Krafton filed its own countersuit and claimed Unknown Worlds’ leadership team had abandoned the game and stole Subnautica 2 materials and documents. At the heart of the dispute is Subnautica 2‘s early access release date.
The three Unknown Worlds executives said the game was on track to meet all of its milestones and launch into early access, therefore triggering the conditions for a $250 million payout tied to the $500 million acquisition. Krafton said the game wasn’t ready for early access release, but the Unknown Worlds executives stated the publisher-imposed delay and subsequent executive firings were simply a way to avoid the colossal earnout.
Delaware State Court of Chancery vice chancellor Lori Will ruled in March that Krafton did illegally fire Gill to take over the studio. Will’s order reinstated Gill into his former role, but not his fellow co-founders: Max McGuire and Charlie Cleveland. She did, however, say that McGuire and Cleveland had taken on “limited roles” approved by Krafton. The court order also extended the payout period to account for Gill’s time away from the company.
Krafton told Game Developer it disagreed with the decision.
Deviant Legal founding partner René Otto called this a “huge win” for Unknown Worlds. “Essentially, this means that the consequences of Krafton’s illegal takeover actions are reversed,” he told Game Developer.
The legal battle is far from over, though. Delaware State Court of Chancery, which Otto said is a specialized court specifically for Delaware corporations, broke the case into two parts. The first covers Krafton’s interference in the Subnautica 2 early access release date and control of the studio, and the second will determine whether Krafton’s actions wrongfully impaired the earnout.
If Krafton is found to have done the latter, Gill, McGuire, and Cleveland will be awarded damages on top of the opportunity to still achieve the $250 million payout.
“A court case can take a considerable amount of time,” Otto said. “As you can imagine, the legal question about whether Krafton illegally took over control over the studio is quite urgent. Losing control over a game studio (especially in development) can cause a lot of harm. The longer you wait, the bigger the impact is. Or as we call it in legal language, it can lead to ‘irreparable damage.'”
Krafton, specifically CEO Kim Chang-han, will have a hard time proving that it didn’t intentionally sabotage the Subnautica 2 release schedule. As part of Will’s decision in March, she largely affirmed the three executives’ retelling of the events—specifically that Krafton essentially made up its reasons for their dismissal to avoid the payout.
“Kim has been warned by [Maria Park, Krafton’s global head of corporate development,] that a ‘dismissal with cause’ would not eliminate the earnout obligation,” Otto said. “Instead of accepting the legal opinion, Kim subsequently asked ChatGPT for help. This illustrates the intent of Kim.”
“It seems like Krafton is the villain in their eyes”
Krafton and Unknown Worlds must also deal with the consequences of the appointment of Unknown Worlds’ boss Steve Papoutsis, the former Striking Distance CEO who stepped into the same role for Unknown Worlds after Gill’s firing.
After taking charge of the studio, Papoutsis said Subnautica 2 would be launching into early access release in May. IGN published a story to exclusively reveal the news shortly after Will’s decision was made public. But according to Gill, Cleveland, and McGuire’s lawyers, Papoutsis no longer had the power to make that announcement as he was no longer CEO. In fact, they claimed Krafton had “intentionally leaked” Papoutsis’ letter to staff.
“Krafton self-servingly announced the launch without any regard to its impact on the game, the team, or the community—let alone this Court’s Opinion,” the legal team representing Gill, Cleveland, and McGuire wrote in a filing published by Game File.
“Announcing the release of a game is momentous, and it is typically accompanied by significant marketing activity, fanfare, and community coordination. And most importantly, the announcement is carefully designed to maximize excitement for the game. That entire process was supposed to be driven by Mr. Gill. However, in defiance of the Court’s Opinion, Krafton has now taken that away, further damaging the game and sowing additional confusion among the Subnautica community.”
The executives’ lawyers want Krafton to show why it shouldn’t be sanctioned for these actions. In a document filed in March (and a public version published on court dockets on April 1), Gill said he has regained access to “certain company systems,” and is working with Krafton to gain access to others. As he met with Unknown Worlds staffers to understand the state of the company and game, he said team members told him “they were unaware of Krafton’s plan to make [the early access release date] announcement, and that the announcement was inconsistent with the studio’s pre-Opinion plan to announce the launch window.”
“I was extremely dismayed to learn from these communications that Krafton had rushed to leak the timeline of the launch after the Opinion came out,” Gill wrote. “A successful Early Access launch requires careful planning and preparation to foster authentic fan participation and support—as the Unknown Worlds’ team’s work reflects. Krafton’s decision to make the announcement itself, in the manner that it did, was not in line with best practices and may well undermine the Subnautica 2 launch.”
Krafton said in its own filing regarding the potential sanctions that the message from Papoutsis, the outgoing CEO, was distorted. In that March 22 filing, Krafton lawyers describe what happened behind the scenes at Unknown Worlds while the lawsuit was ongoing. They claim Subnautica 2 remained Unknown Worlds’ top priority and said the dev team “continued to build” the title while undertaking milestone reviews. Krafton said that during a meeting in March, “well before” before the court reinstated Gill to his position as CEO, Krafton found Subnautica 2 to be on track for an early access release in May.
“Nothing in the parties’ Equity Purchase Agreement or the Court’s Opinion bars Krafton from sharing its views that the current Subnautica 2 build was on track for an Early Access release in May 2026,” Krafton’s lawyers wrote. Paptoutsis’ message was just his opinion, they said, and nothing is binding.
The filing does not address the allegations that the company leaked the letter to IGN.
Nothing has been publicly filed in the court docket since April 1. However, another wrinkle now needs ironing out: Krafton has been removed as publisher from the Subnautica 2 Steam page. Michael Futter of consultancy agency F-Squared, who posted an analysis of the move on BlueSky, told Game Developer the removal doesn’t necessarily mean that Krafton and Unknown Worlds have separated.
“It could just be an optics play to shuffle Krafton out of the spotlight since the Subnautica community has clearly chosen sides,” he said. “It seems like Krafton is the villain in their eyes. However, I did dig in more this morning and Krafton is listed under the ‘Franchise’ label further down the pages for Subnautica and Subnautica 2.”
Game Developer has reached out to Krafton and the three executives’ lawyers for comment.
Futter said that despite the unknowns, the future of Krafton and Unknown Worlds’ relationship will be a continued challenge. “It’s going to be extremely hard to repair the relationship between Unknown Worlds leadership and Krafton… especially after such a humiliating court defeat,” he said. “And this assumes that either party is interested in mending fences.”
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