Delaware Vice Chancellor Lori Will has issued a decision in the lawsuit filed by Charlie Cleveland, Max McGuire and Ted Gill against Subnautica 2 publisher Krafton—one that favors the three ousted Unknown Worlds executives and declares that Krafton deliberately schemed to oust the trio from the studio to deny them a $250 million payout.
The decision became public earlier today after it was uploaded on the website of the Delaware State Court of Chancery. Krafton has been ordered to restore Gill as the CEO of Unknown Worlds with “full operational authority,” which give him final say on the release date of Subnautica 2.
That release date—and a payout that would have ensued had Unknown Worlds hit previously agree-upon revenue goals—was a major flashpoint between Krafton and the ousted Unknown Worlds leadership. In the lawsuit, the plaintiffs argued that Krafton sought to delay the Early Access release of Subnautica 2 to avoid triggering a payout, and fired Cleveland, McGuire, and Gill when they refused to do so.
Vice Chancellor Will affirmed this version of events in today’s opinion. She also extended the length of the earnout period by the duration of Gill’s time away from Unknown Worlds. However because restoring Gill “vindicates the sellers’ operational rights,” Will has not ordered the company to re-hire Cleveland and McGuire in their “peripheral roles.” She also declined to state if Krafton’s actions “wrongfully impaired” the earnout, or if any resulting damages are owed. That will be decided in “the second phase” of litigation.
A Krafton spokesperson informed Game Developer that the company “respectfully disagrees” with today’s ruling, and that it is evaluating its options to determine the 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,” they said. “In the meantime, KRAFTON’s immediate focus remains unchanged: delivering the best possible game to Subnautica’s fans.”
Cases tried in the Delaware Court of Chancery may be appealed to the Delaware State Supreme Court. The spokesperson said that Krafton looks forward to pushing out “the newly-updated version” of Subnautica 2 “as soon as possible.”
Krafton “was supportive” of Cleveland and McGuire’s revised roles
Today’s ruling resolves some key questions around the legal battle, which saw Unknown Worlds take the position that Cleveland and McGuire had become “absent” from the company and that they, along with Gill, were rushing the Early Access release out the door to secure their promised payout. It also accused them of stealing confidential data.
Will refuted that version of events. “Krafton’s newly-manufactured justifications for the terminations are pretextual,” she declared. “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 nature of Cleveland and McGuire’s “peripheral” roles is fully spelled out in the legal document, and paints a complex situation following the unsuccessful release of Unknown Worlds’ strategy game Moonbreaker. Cleveland and McGuire both stepped back from day-to-day leadership duties at the studio with the approval of Gill and their partners at Krafton (both still consulted on the development of Subnautica 2 and assisted in a “course correction” that set the development team in a strong direction in spring of 2024).
Cleveland and McGuire both voluntarily reduced their salaries to reflect their reduced contributions. At one point, Krafton head of corporate development Maria Park told Gill that Krafton had “no concerns” about Cleveland and McGuire’s role changes.
A takeover plan conceived by ChatGPT
According to the decision, Krafton CEO Changhan Kim felt that Krafton had overpaid for Unknown Worlds, and that paying out the contractually-agreed-upon earnout would earn him a reputation as a “pushover.”
In May 2025, Kim began his campaign to delay Subnautica 2, complaining that the planned payout was a “bad deal” and he felt “taken advantage of.” He faced pushback from Park, who informed him that it would be “better proceed” with the planned Early Access release. She warned Kim that because the game’s build was not “in such a bad shape,” this could become a “debatable” issue in potential litigation.
Undeterred, Kim turned to generative AI tool ChatGPT for advice on how to proceed. He took the large language model’s generated responses as actionable advice, forming a task force named “Project X.” Krafton’s decision to follow the “advice” of a generative AI tool led to a ChatGPT-generated “key summary of responses” became the foundation of Krafton’s plan for fully taking over Unknown Worlds.
This summary stated Krafton could accomplish its goals by preparing “preemptive framing” around protecting product quality and fan trust, “securing control points” by locking down publishing rights on Steam and on consoles, and preparing “systemic materials for legal defense.”
Ironically, later in 2025, Krafton would declare itself an “AI First” company in order to “deliver differentiated user experiences and drive innovation across all services.”