News emerged earlier this month that Duke Nukem Forever developer 3DRealms was closing its doors. We’ve learned today that this is not completely true. By way of a press release sent out this afternoon, it has been confirmed that 3DRealms as a company is still very much alive and kicking. While the entire DNF development team has been let go, upper management remains and has no intention of calling it quits. The studio will “continue to operate as a company and continue to license and co-create games based upon the Duke Nukem franchise.”

3DRealms also shrugged off a lawsuit that publisher Take-Two set in motion mere days after the funding dilemma came about. While Take-Two claims it chipped in $12 million dollars towards funding, 3DR says only $2.5 million of that sum went to them.

For its part, 3DR spent $20 million on DNF. Negations with Take-Two to fund DNF were ongoing over the past few months but fell through, leading T2 to draft up a last minute proposal in an attempt to acquire the Duke Nukem brand and associated development team. Naturally, 3DR saw this as unacceptable and stepped away from the deal. Without funding, 3DR was forced to cease further development and release the team.

In light of recent press articles and statements by Take-Two (to the media and in a lawsuit), we want to set the record straight on some issues.

Despite rumors and statements to the contrary, 3D Realms (3DR) has not closed and is not closing. 3DR retains ownership of the Duke Nukem franchise. Due to lack of funding, however, we are saddened to confirm that we let the Duke Nukem Forever (DNF) development team go on May 6th, while we regroup as a company. While 3DR is a much smaller studio now, we will continue to operate as a company and continue to license and co-create games based upon the Duke Nukem franchise.

As some of you may know, Take-Two filed a lawsuit last week containing various accusations and claims against 3DR and the uncompleted DNF game. Take-Two never paid 3DR advances or any signing bonus or any other funds related to DNF, up until July 2008, at which time they paid $2.5m in connection with another agreement for an unannounced game. This is the sum total Take-Two has paid 3DR in connection with DNF. Take-Two claims that they paid $12m to GT Interactive/Infogrames to acquire the publishing rights for the DNF game. To be clear, 3DR was not a party to that transaction and did not receive any money from it. When the DNF game was originally signed with GT Interactive in 1998, GT paid 3DR a $400,000 signing bonus. Up until July 2008, this was the only publisher money we received for the DNF game. Meanwhile, 3DR put over $20m into the production of DNF.

Take-Two retains publishing rights for the DNF game, although 3DR retains certain rights to sell the game directly to the public. Late last year, 3DR began negotiations with Take-Two to provide funding to complete the DNF game. In the meantime, 3DR was hitting mutually-agreed milestones, despite not having a new agreement finalized. Take-Two was well aware that 3DR needed the funding to continue the DNF game development. Suddenly, after months of negotiations, Take-Two materially changed the parameters of the proposed funding agreement. 3DR informed Take-Two that it could not financially afford the changes Take-Two was suggesting and would be forced to release the team if an agreement was not reached. Take-Two made a last minute proposal to acquire the Duke Nukem franchise and the 3DR development team. Take-Two’s proposal was unacceptable to 3DR for many reasons, including no upfront money, no guarantee minimum payment, and no guarantee to complete the DNF game. From 3DR’s perspective, we viewed Take-Two as trying to acquire the Duke Nukem franchise in a “fire sale.” Those negotiations fell through on May 4th, a deal never materialized, and the DNF team was sadly released a few days later.

Less than a week after the DNF team was released, Take-Two filed its lawsuit in New York, seeking immediate temporary injunctive relief. The court denied Take-Two’s request for a temporary restraining order. While we cannot comment on the details of the ongoing lawsuit, we believe Take-Two’s lawsuit is without merit and merely a bully tactic to obtain ownership of the Duke Nukem franchise. We will vigorously defend ourselves against this publisher.

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Read more: 3DRealms Shuts Down, Future Of DNF Put In Question,  Duke Nukem Forever Was Meant To Go Gold On April 1,  3DRealms Boss Spent $20-30 Million On Duke Nukem Forever,  Duke Nukem D-Day Teased,  2K Games To Publish Duke’s Latest