Texas based developer TimeGate Studios filed for Chapter 11 bankruptcy in the Texas Southern Bankruptcy Court yesterday.

In the court documents which were obtained by Polygon.  TimeGate lists no more than 50 creditors that are owed amounts ranging from $10 million to $50 million in liabilities.  The companies that TimeGate owes the most to are Unreal Engine developers Epic Games, Agora Games an online game service and DJ2 Entertainment a transmedia developer. The court documents also listed a local pizzeria whom TimeGate owes $34.89 and Birthplace Management Group, whom TimeGate owes $20,539.20.

Southpeak Interactive the original publisher of Section 8 is listed as a major creditor and is owed an unspecified amount in the claim.   TimeGate is also facing having to pay out $7.35 million in damages in a fraud suit between itself and SouthPeak which may cost them the Section 8 license.

In 2009, TimeGate filed suit against SouthPeak claiming that the company withheld royalties and failed to follow through with the localizing of Section 8.   SouthPeak followed by filing a counter suit, accusing TimeGate of not investing enough of their own capital into the development of Sections 8.  Both companies entered arbitration with a third party, who then ruled in favor of Section 8 publisher SouthPeak.   The publisher was award $7.35 million in damages and full control over Section 8 – the latter part of this decision was overturned last March in federal court.

The U.S. Court of Appeals for the Fifth Circuit in April filed a motion to have the federal court ruling reversed and reinstate the arbitration previously awarded to SouthPeak.

TimeGate announced recently its current project, a minimalist PC shooter titled Minimum this April.  Their most recent release, Aliens: Colonial Marines which was co-developed with Gearbox is the subject of a class action suit that claims the game was falsely advertised by both Gearbox and Sega.

TimeGate at this could be reached for any further comment.

source: Polygon

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