Here's some sad news coming from the gaming industry: Gamasutra has recently confirmed that Hellgate: London developer Flagship Studios has undergone mass lay-offs. While there is no specific information available as to why many of the employees were made redundant, it is already known that Flagship Studios' MMORPG hasn't been performing as well as expected.

But that's the least of Flagship Studios' problems. Korean co-owner and distributor HanbitSoft is reportedly trying to take the reins over the game and take IP ownership from Flagship. "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," said HanbitSoft.

However, it seemed that Flagship Studios was not aware of HanbitSoft's decision to try and wrench Hellgate: London away from the developer. This is a quote of their response when asked about the current situation:

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”.

HanbitSoft wouldn't budge, though, and seems to have taken legal action. Their lawyers have contacted Hellgate fansite Hellgate Guru and have posted their response, part of which is quoted below:

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...

On a slightly unrelated note, however, several subscribers to Hellgate: London have reported that the option to modify or remove subscription has been temporarily disabled. Damage control, perhaps?

In any case, we do hope that the laid-off employees would have new jobs to fall back to, and that this legal scuffle will be resolved soon. There's still the matter of improving the game and making subscribers happy, after all.

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Related articles:

• Hellgate: London - over 1 million open beta accounts in Korea
• Flagship CEO on learning from and correcting Hellgate: London mistakes
• Hellgate: London devs admit shortcomings