A Delaware judge has ruled that Krafton breached its contract with Unknown Worlds by firing key employees without cause and seizing control of Subnautica 2. The court ordered the reinstatement of CEO Ted Gill with full authority over the studio and its upcoming early access launch. The $250 million earnout period has been extended to September 15, 2026.
On March 16, 2026, Vice Chancellor Lori W. Will of the Delaware Chancery Court issued a ruling in favor of Fortis, representing Unknown Worlds founders, on phase one claims. The court found that Krafton breached the Equity Purchase Agreement (EPA) by terminating key employees—including CEO Ted Gill, Charlie Cleveland, and Max McGuire—without valid cause via a July 1, 2025 board resolution and by improperly seizing operational control of Unknown Worlds and Subnautica 2. The resolution was declared ineffective to the extent it infringed on Gill’s operational control rights. Krafton must restore Gill’s access to the Steam platform and refrain from impeding his authority over Subnautica 2’s early access launch, granting him full operating authority over the studio and game release plans. Gill was replaced by Steve Papoutsis, who also serves as CEO of Striking Distance. The $250 million earnout—tied to Unknown Worlds’ performance post-2021 acquisition for $500 million equity—has been extended through September 15, 2026, and potentially beyond. The earnout triggers above $69.8 million revenue, paying $3.12 per additional dollar up to the cap. Internal projections predicted 1.67 million copies sold by Q4 2025, yielding $191.8 million to $242.2 million. Court documents revealed Krafton CEO Changhan Kim consulted ChatGPT for strategies to avoid the earnout, including forming “Project X” task force and a “Response Strategy to a ‘No-Deal’ Scenario” with pressure tactics and messaging. Kim feared the deal made him a “pushover.” The court deemed Krafton’s firing justifications—such as abandonment or data theft—pretextual. Phase two litigation on damages remains pending.
