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Wow, this is getting very messy. IGN tries to clear it all up.

A significant number of Hellgate: London, Mythos and Ping0 staff have been made redundant, Gamasutrareports. Coming mere weeks after confessions from Hellgate executives regarding the game’s unfinished state, a sizeable rant by the company’s sole surviving programmer, and suggestions that the staff went considerably over-budget, the end of the line draws near for Flagship. Having accepted significant amounts of venture capitalist funding, Flagship currently has no way of repaying that investment, and presumably no way of paying day-to-day bills, despite EA’s claims of the game having one active million subscribers.However, Korean distributor and co-I.P. owner HanbitSoft later clarified that the majority of those subscribers were in their territory. And because of that, the firm has today taken control of Hellgate: London with the intention to maintain and update the game using in-house staff.

 

HanbitSoft states that the reason it is pursuing this course of action is because “It is hard for us to accept Flagship Studios’ requests for continued support in capital and funding any longer and because Flagship was being difficult”, and because it co-owns a direct stake in the IP, it therefore “has a say in reviewing and determining any course of action to be taken with Hellgate: London.”HanbitSoft is expected to take full control over the IP. HanbitSoft goes on to state that in doing so, it will be able to “properly manage and develop Hellgate: London into a good game with proper content”, with its own in-house team of developers.

The report further states that the online service of Hellgate: London, which started in January 15, 2008 acquired 100,000 early users within the first two weeks of operation during which time HanbitSoft earned 3 billion won (approximately 3 million USD) for the sales of Hellgate: London in Korea. However, the number of players in the game significantly declined due to the lack of general out-of-the-box content and the sparsity of ongoing content updates. Since its Open Beta launch, Hellgate: London has gone from being the 9th most played game in Korea to 52nd post-commercial launch.

Amusingly, Flagship knew nothing of the Asian revolt, and now intends to take all necessary legal action to retain control of Hellgate worldwide:

 

This story is an outright lie. We have no idea where they are getting their information from and have asked legal counsel to pursue the issue. We are mystified by Hanbitsoft’s conclusions and any attempt to take over the IP will be met with a strong and swift response, to “illegally take over the IP”. All right title and interest in Hellgate; London resides in Flagship Financing, LLC a wholly-owned subsidiary of Flagship Studios. We are outraged that Hanbitsoft would attempt to completely tarnish the reputation of its most vital developer. Hanbitsoft’s new management clearly does not understand the terms of its relationship with Flagship.

The saga continues, stay tuned.

Update: Hanbitsoft’s lawyers got in touch:

 

Please understand that the facts are (1) HanbitSoft is an exclusive licensee of both Hellgate and Mythos in Asia, with rights to sublicense the games; (2) in addition, HanbitSoft is a secured creditor who has been pledged the Mythos (but not the Hellgate) intellectual property as collateral for a loan; (3) Comerica, another secured lender, has been pledged the Hellgate intellectual property as its collateral for a loan; (4) Flagship Studios does not currently own the intellectual properties to either game, which are held in separate companies subject to the security interests of lenders, and Flagship Studios’ interest in those companies is also pledged to its lenders; (5) it is unfortunate that Flagship turned down additional investments HanbitSoft offered to make that would have allowed it to keep its doors open, but HanbitSoft hopes to work with Comerica and some of the team at Flagship to see if there is a way to continue to generate content to keep Hellgate online in Asia and to finish the development of Mythos.

Note point five: “would have allowed it to keep its doors open.”