Section 8 developer files for bankruptcy protection

TimeGate Studios, the developer behind Section 8 and co-developer of Aliens: Colonial Marines, has filed for Chapter 11 bankruptcy protection. The petition, filed in the Texas Southern Bankruptcy Court yesterday, lists less than 50 creditors owed money from TimeGate.

Polygon reports that the list of chief creditors includes Unreal Engine developer Epic Games, Section 8 publisher Southpeak Interactive, Agora Games, and DJ2 Entertainment. The amounts run the gamut, from a local pizzaria ($34.80) and video game agency ($20,539.20), to much larger amounts ranging from $10 million to $50 million.

TimeGate and SouthPeak have been locked in a legal struggle since 2009. TimeGate filed suit against the publisher in 2009, claiming withheld royalties and that it failed to localize Section 8. SouthPeak subsequently counter-sued saying TimeGate hadn't put enough of its own funds into the game. When they entered arbitration, a third party awarded SouthPeak $7.35 million. That was successfully overturned, but then in April a court reinstated the ruling.

On top of the difficulties with SouthPeak and Section 8, TimeGate has been facing scrutiny for its part in Aliens: Colonial Marines. After the game received a poor reception, purported insiders made differing claims as to how Gearbox and TimeGate divided the labor. The developer suffered layoffs shortly after. Just a few days ago, a lawsuit was filed against Gearbox and Sega for false advertising related to Colonial Marines, but TimeGate was not reportedly included in that suit.