According to a report by Polygon, Silicon Knights has sold off many of its physical assets and has closed its office, with just a few employees left. Denis Dyack and a group of core employees left Silicon Knights to form Precursor Games, who is now working on the crowd funded game Shadow of the Eternals, the spiritual successor to Silicon Knight’s Eternal Darkness: Sanity’s Requiem.
The developer had been struggling financially for years, following some unsuccessful lawsuits, and more successfully counter-filings. In 2007, Silicon Knights sued Epic Games for failure to “provide a working game engine” and also claimed Epic was “sabotaging efforts by Silicon Knights and others to develop their own video games.” Epic Games countersued and won May 30th, 2012 on grounds of copyright infringement, misappropriation of trade secrets and breach of contract, netting the publisher $4.45 million.
Silicon Knights, as a condition of Epic’s suit, was also ordered to destroy any and all unsold retail copies of games built on the Unreal Engine 3, including Too Human and X-Men Destiny. Silicon Knights sold its computers to Precursor Games in July 2012, prompting Epic Games’ attorneys to file legal motion to verify no assets or game engine went with said machines. According to subsequent court documentation, the computers were wiped clean before being sold.
Silicon Knights also allegedly recieved a $4 million loan from the Ontario government, leaving the developer even further in debt.