When Factor 5 filed for Chapter 7 bankruptcy on May 13th of this year, they had an estimated $US50,000 to $US100,000 in assets, with debt estimated at between $US1 and $US10 million, with 69 claims for unpaid wages in excess of $US900,000. The lawsuit alleges that, prior to the filing, Factor 5 and its three founders transferred company assets to a limited liability company called Blue Harvest, now White Harvest, including original intellectual property and the partially completed code for a Wii installment of the Star Wars: Rogue Squadron series. As the employees’ lawyer James Smith explains:

“We believe and have alleged in the complaint that Factor 5 and White Harvest are essentially the same company, being run by the same people, being represented by the same sets of lawyers, with all the same management and ownership and control, performing all the same work that they were doing at Factor 5, just now with a new name and a new address”.”

The employees are understandably upset. According to the filing, employees at the studio weren’t paid after November 1st of last year, after which they were laid off with little notice on December 19th, right before Christmas.

If the allegations are true, this would mean that Factor 5 took assets that could have been negotiated in order to pay their workers and passed them over to another company to save them from sinking along with the rest of the ship.

With the defendants’ lawyer declining to comment on the situation, we’re currently only seeing one side of the story of course, but quiet lawyers aren’t generally a good sign. We look forward to seeing how this whole thing plays out in court, should it make it there.

Employees sue bankrupt San Rafael video-game company [Marin Independent Journal via Edge]

Ambition is what drew me to Factor 5.

As a gamer I came to the studio’s work a little late. I missed their Turrican days, their era of making games for the Super Nintendo and Genesis. I came upon them as an N64 gamer, spotting their logo at the intro to Star Wars: Rogue Squadron. That 1999 shooter was one of the first games to utilise the N64’s RAM expansion pack for improved graphics resolution. That was the first hint to me that Factor 5 was a studio interested in pushing technology.

The next game Factor 5 game I played — still before I had become a reporter — was the one that forever charmed me to the studio. It was Star Wars: Battle for Naboo, a new-Trilogy sequel to Rogue Squadron. A hidden feature is what won me over: stuffed into its N64 cart was audio developer commentary for each of the game’s levels. I’d never heard such a thing before.

This was a studio of developers with whom I wanted to speak. And I would.

At the start of the GameCube era, in 2001, I was just beginning to cover games. I played Factor 5 GameCube launch title Star Wars Rogue Squadron II: Rogue Leader as a novice reporter at my first E3. It is, to this day, among the best-looking games developed for a Nintendo platform. I don’t remember talking to Factor 5’s U.S. president Julian Eggebrecht then, nor for its 2003 sequel, Rebel Strike. But it was by that second GameCube game that I was writing a freebie column for IGN about the GameCube.

What I wrote about Rebel Strike highlighted the second defining characteristic of Factor 5 for me: they bit off mouthfuls at a time. Rebel Strike was not just a full new game. It house the entirety of its predecessor, re-crafted for split-screen co-op. It contained not just audio commentary but making-of documentaries. But there were signs of rough edges: peculiar dips to black between gameplay and in-engine cutscenes; a group of on-foot side-scrolling levels that played poorly and curiously lacked audio commentary.

In 2006, I finally got paid for something I wrote about Factor 5. I was at MTV and covered the topic of developers using audio commentary. I referenced Factor 5 as a pioneer.

Factor 5 disappeared from my radar after that until I finally met Eggebrecht in person at a Sony event in 2006. He was showing, for the first of several times, the dragon-combat game Lair. He was a champion of PS3 motion control, a booster for the system’s technical prowess and ambitious as ever. He wanted a game with air combat, ground combat, allusions to the ethics of modern war, hooks to the PS3’s web browser, elaborate cutscenes and so much more. There were those two signatures of Factor 5 again, summed up in one word: ambition.

But Lair was rougher than Rebel Strike. Factor 5 barely attempted to hide this. In one of the more open displays of developer frustration with their own game, the studio included commentary in Lair that alluded to the game suffering from what was described as a cure of the dragon games, a problem that they said extended to personal problems among some of the staff. Following up in an e-mail, Eggebrecht said to me in 2007: “I am not a believer in ghosts, but this one was haunted.”

Factor 5 faded away again, rumoured over the next two years to have canceled its deal with Sony, possibly returned to working with Nintendo. Then came the news reported in Variety that Factor 5 was one of the studios suffering from having made a deal with the collapsed publisher Brash. I reached out to Eggebrecht again, who all but confirmed that the studio had been making a Superman adventure and expressing hope that the game would still come together.

“With that said,” he wrote to me in November, “Things are obviously in flux and we hope that the game proves to be as indestructible as our hero…”

And then? Today’s news. Factor 5 in the U.S. is no more. I’ve not heard back from Eggebrecht about this turn of events. The statement on the company’s official website indicates that its German parent company still has projects coming.

There may be a future yet for Factor 5. There definitely was a past worth appreciating.

Rumours of the Lair developers closure surfaced in December of last year, following rumours that half of the staff had been let go. The rumours pointed towards the cancellation of their Superman project due to the failure of Brash Entertainment as a major factor in the layoffs and closing, which is backed up by the official statement appearing on the Factor 5 website today.

We are sorry to announce the closure of the San Rafael-based Factor 5 Inc. studio, but the obstacles created by the sudden bankruptcy of Brash Entertainment for the continuation of operations have turned out too great to overcome in the current economic climate.

Note that this development doesn’t mean the end to the Factor 5 name. The statement continues:

Factor 5 GmbH, which has been creating games since 1998 with its headquarters in Cologne, Germany, is completely unrelated to Factor 5 Inc. and the circumstances surrounding Factor 5 Inc.’s recent challenges. Although we are saddened by Factor 5 Inc.’s situation, our corporation will remain unaffected by these developments and has partnered with both old and new friends in the industry who will reveal our upcoming projects over the next months.

In other words, that other company had problems, and the German branch of Factor 5 would like to put as much distance between those problems and it as humanly possible.

We extend our sympathy to those left jobless by the studio’s closing, even if most of them have hopefully moved on to bigger and better things by now.

Factor 5 Website [Official Site]

Lair and Rogue Squadron developer Factor 5 was hard at work on a Superman video game before it contracted a near-fatal case of Brash Entertainment Publishing Agreement Syndrome. This is what that game looked like.

Unseen 64, where games goes when they die, has concept screen shots and a brief video of the planned PlayStation 3 and Xbox 360 game, visuals dating back to when Factor 5 employees were still being paid. It looks good enough, but also looks about as finished as the Flash game that BottleRocket was working on for Brash before the publisher’s collapse.

And Doomsday looks spectacular.

There’s really not much to see here, outside of a few environment concepts and early visual direction. The game was due to ship sometime in 2010, following a formal announcement at E3 2008 (which never happened).

More screens and a brief pre-rendered concept at Unseen 64.

Superman (Factor 5) [X360/PS3 - Cancelled] [Unseen64 - thanks, Miklós!]

Earlier we posted rumours that Factor 5 laid off half its staff. Now comes word the whole studio just closed. I guess everyone’s answer to the economy is just to give up.

This one still gets the rumour tag because there’s no name on the source. But says IGN’s Matt Casamassina over on their boards (subscription required):

(Casamassina) [I w]as hoping the rumours weren’t true. Contacted Julian over at F5 to shed some light, but he didn’t get back to me. Got an e-mail from an inside source tonight:

“Hi Matt,

How have you been? Haven’t seen you guys since E3. I hope that you’re doing well!

[Redacted] wanted me to contact you with some late breaking news. We just learned from inside sources that developer Factor 5 has officially closed their doors as of today. That’s some pretty big news considering that those guys have been around for quite a while. It’s definitely a real shame! I hope that this information is helpful to you. Take care, and please say hi to Bozon for me.”

And another one bites the dust. Since everyone’s strategy is to fire their way back to full health, may I make a simple request? Please adjust the fiscal quarters ahead by one month. Like daylight savings time for Wall Street or something. That way, 500,000 people won’t be getting fired right before Christmas, they can get pink slipped in January and not have their holidays ruined. At least give us that.

Factor 5 Dead Too? [CasuallyHardcore (which notes Factor 5 published the Star Wars/cosmetics crossover game "Rouge [sic] Leader.”) And thanks reader Marc S.]

According to Edge’s anonymous source, the alleged details of Factor 5’s funding problems, as announced on an employee’s personal blog, were spot on. Employees haven’t had a paycheck since mid-October, the source said, adding that the animator who dished the dire details on Factor 5 has since left the company — and may even facing legal ramifications for making it’s problems public.

Factor 5 was said to be seriously financially impacted by the folding of Brash Entertainment, which itself laid off staff in November.

Source: Factor 5 Cuts 37 [Edge]

Animator Sam Baker wrote on his personal blog, via 1UP, that after a brief leave of absence at another company, he’d returned to “find out no one at Factor 5 had been paid in a month…. and we weren’t going to any time soon.” Baker writes that the financial situation became more dire, with health benefits being cut.

And then? “Then things turned bad…” he wrote.

Baker writes that the project he and other Factor 5 employees were working on was put on hold, citing a lack of “proper funding.”

He notes that the nixed project was already eight months into development. In March, the doomed Brash Entertainment announced it had signed on Factor 5 to do a licensed game due in 2010. Baker writes in a follow up post (he has since deleted the original post and all other entries from his blog) that “This does not mean that we’ve stopped production on [the Brash] game, or that it was ever even in trouble.”

In his original post, Baker paints a very gloomy financial picture for Factor 5, writing that president Julian Eggebrecht “basically told us that if we didn’t receive funding in 1 week, all of us should move on and look elsewhere for another job.” His subsequent post reads like an attempt to retract some of that.

Factor 5’s last game, Lair, was released in 2007 to a mostly negative response. It was rumoured to be working on a Wii title and a game based on DC Comics’ Superman.

We’re reaching out to Factor 5 to try to learn more about the situation.

More Raining, More Pouring… [Blogspot via 1UP]

More than 20 people have been let go across multiple departments, according to a Brash spokesperson.

Affected by this move will also be the closing of some open positions that the company had planned to fill this fiscal year. Employees affected by this action will receive severance and extended benefits. Brash Entertainment will continue to strategically work on its business including the upcoming release of Six Flags Fun Park for the Wii scheduled for this December, and a video game based on the SAW movie franchise for release in 2009.

Variety is reporting that the struggling developer’s problems go much deeper.

According to the story that ran early this morning, Brash is working with studios to return licenses or sell them to other publishers. They’ve also stopped paying developers.

Variety also reports that the company has canned Superman which it was working on with Factor 5.

Tough times all around, it seems.

Exclusive: “Kid” Icarus Wii Concept Artwork Revealed [Kombo]