A U.S. court has found that Krafton's dismissal of Unknown Worlds' management was unfair and ordered the reinstatement of the fired chief executive officer. A separate damages lawsuit will continue.

The Delaware Court of Chancery ruled on March 16 local time that Krafton must reinstate Unknown Worlds CEO Ted Gill (테드 길) and return operational and control rights over the studio, including authority over the release of Subnautica 2. The court also ordered that the calculation deadline for conditional performance pay, or an earn-out, promised to Gill and others be extended by 258 days, the length of the dismissal period.

Unknown Worlds is a U.S. game developer that Krafton acquired in 2021 for $500 million. Its ocean adventure game Subnautica, released in 2018, found success overseas and built name recognition.

The dispute began during development of the sequel, Subnautica 2. Krafton removed founding members Charlie Cleveland (찰리 클리블랜드), Gill and Max McGuire (맥스 맥과이어) from management last year and appointed Steve Papoutsis (스티브 파푸트시스), head of Striking Distance Studios (SDS), as the new CEO.

The dismissed executives said Krafton intentionally carried out the removals to avoid paying the earn-out and filed a damages lawsuit in a U.S. court seeking up to $250 million, about 340 billion won. Krafton countered that delays in developing Subnautica 2 stemmed from the management's negligence.

The court did not accept Krafton's rebuttal. It ruled that Krafton fired the executives to avoid paying performance compensation. The ruling also stated that Krafton CEO Chang-han Kim (김창한) asked ChatGPT about a strategy to seize control of the studio's management rights.

The court also rejected Krafton's claim that Unknown Worlds' management spent time on other work such as film production or game research for children with autism, saying it was difficult to view that as intentional deception. It also found that Krafton was aware and tolerated and agreed to it.

The decision concerns reinstatement and the return of operational authority, and it does not cover whether to recognise the amount of damages sought by the former management. The lawsuit proceedings will continue separately.

Krafton issued a statement saying, "This ruling did not address the damages claims filed by Unknown Worlds' former management or the issue of additional performance-based compensation related to Subnautica 2, and litigation procedures on those matters will continue." It added, "We respectfully disagree with this ruling and are reviewing various possibilities regarding our future response."

On the game's release plans, it added, "Krafton and Unknown Worlds have been focused on improving the quality of the game and preparing for an early access release, and we hope to present an improved version to players as soon as possible."