Judge Orders Krafton to Reinstate Subnautica 2 CEO and Extend $250 Million Bonus Window

It's been one of the messiest sagas in gaming this past year. And now, after months of legal back-and-forth, Krafton has taken a significant hit in court.

A Delaware Chancery Court judge has ordered Krafton to reinstate Ted Gill as CEO of Subnautica 2 studio Unknown Worlds Entertainment, handing him full operational authority over the game's Early Access launch. The ruling, delivered by Vice Chancellor Lori W. Will on 16 March 2026, is about as decisive as these things get.

"Krafton breached the EPA by terminating the Key Employees without valid cause and by improperly seizing operational control of Unknown Worlds," the ruling reads, as reported by Kotaku.

So. How did we get here?

The Fallout That Started It All

Back in the summer of 2025, Krafton fired Gill along with co-founders Charlie Cleveland and Max McGuire. The stated reason? That the team had failed to get Subnautica 2 ready for a timely launch. The game was pulled from its planned Early Access window and pushed into 2026.

The timing raised immediate suspicion. Unknown Worlds had been working toward an Early Access release that would have triggered a $250 million earnout bonus under the terms of Krafton's 2021 acquisition of the studio, which cost $500 million upfront. The earnout formula was highly leveraged: if Unknown Worlds surpassed a revenue threshold of $69.8 million, Krafton would owe $3.12 for each additional dollar of revenue generated, up to that $250 million cap.

Gill and his former colleagues argued they were pushed out specifically to prevent that bonus from being paid. Krafton fired back, accusing the departed staff of stealing documents ahead of their exit, and later claiming the co-founders had been quietly working on unrelated projects.

The court wasn't buying any of it.

What the Judge Actually Said

Vice Chancellor Will's ruling was pointed. "Frustrated by the Key Employees' refusal to forfeit operational control and facing a nine-figure liability, Krafton went searching for a pretext," she wrote. "This court of equity will not permit a party to use the after-acquired evidence doctrine to fabricate Cause where the evidence shows the termination decision was made first."

The document theft argument? Also dismissed. The judge found that the former employees were acting to protect the studio's work product amid Krafton's takeover attempt, kept the data confidential, and returned it promptly.

The court also rejected Krafton's claim that Cleveland and McGuire had been neglecting their duties, noting that their limited roles had long been known to and accepted by Krafton.

Perhaps the most damaging detail to emerge from the ruling: Krafton's CEO had consulted ChatGPT to find a way out of paying the performance bonus that the company had internally calculated it would owe. That particular detail speaks for itself.

What Happens Now

Gill is reinstated as CEO with full operational control. Krafton must immediately restore his access to the Steam platform and cannot impede his authority over Subnautica 2's Early Access release.

The base earnout testing period has been extended by 258 days to 15 September 2026, with the Unknown Worlds legal representatives retaining their contractual right to extend it further to 15 March 2027.

Cleveland and McGuire were not directly reinstated by the ruling, though the court noted that Gill now has the authority to rehire them himself.

Worth noting: this Phase One ruling does not close the case entirely. Phase Two, which will cover money damages and whether Krafton deliberately impaired the earnout, remains reserved for a future proceeding.

Krafton's Response

Krafton issued the following statement following the ruling:

"Krafton puts players at the heart of every decision, and that will never change. Over the past several months, Krafton and the Unknown Worlds team have worked tirelessly to strengthen the game and prepare it for an Early Access release, with a continued focus on delivering the best possible experience for the Subnautica community. We look forward to pushing out the newly updated version as soon as possible for players.

"While we respectfully disagree with today's ruling, we are evaluating our options as we determine our 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. In the meantime, Krafton's immediate focus remains unchanged: delivering the best possible game to Subnautica's fans."

Diplomatically worded. Though given the judge's comments about Slack messages, ChatGPT consultations, and manufactured justifications for the firings, Krafton's position heading into Phase Two looks shaky at best.

What This Means for the Game

Subnautica 2 remains one of the most wishlisted games on Steam heading into 2026. The original leadership team, by their own admission before the firings, believed the game was ready for Early Access. Whether the work done in the months since requires further time before launch is unclear, but with Gill back in the chair and the legal cloud lifting slightly, things are moving in a better direction for fans who have been waiting.

The next question is whether Krafton appeals, stalls, or genuinely cooperates. The judge acknowledged the "obvious bad blood" between the parties but made clear that neither side is exempt from their contractual obligations.

Further litigation is still pending. This one is far from over.