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Stargate studio files for bankruptcy protection

Company also cuts ties with former CEO Whiting following alleged wrong-doing

Phoenix-based developer Cheyenne Mountain Entertainment has filed for Chapter 11 bankruptcy protection, according to a statement from the company.

The company said that the move was instigated in order for it to address its growing debt and that in-house staff were continuing work on upgrades and expansion for Stargate Resistance.

CME holds the license to create online games based on science fiction TV series Stargate SG-1 and its spin-offs.

"Cheyenne Mountain's corporate structure has undergone some dramatic changes in the last few weeks, and that has resulted in various actions such as the filing for Chapter 11," said a statement, posted to the Stargate Worlds forum.

"Certain parties believed that was the right thing to do, other parties do not and this is still being evaluated and may be rescinded. Even if the bankruptcy should go through, however, Chapter 11 simply allows a company to restructure its debt to a manageable plan approved by the courts. It does not absolve a company of debt, and it does not shut it down or otherwise affect its daily operations.

"This will all be sorted out in the legal and proper manner, and all of us on the development side of things hope it's done as quickly as possible. That said, our entire staff is in-house working on upgrades and expansions for Stargate Resistance, and we continue to be motivated and excited by the response we've received from our customers."

According to a statement on the company's site, CME has also severed ties with its former chairman and CEO following "various wrong doing against the company".

"The Company [...] became aware a few months ago that Mr. Whiting, was named in a complaint filed in Utah County, Utah, (Case No. Civil 0904022438), and that he has caused the Company to be named in that same lawsuit, and he has allegedly obligated the Company for monies paid to Garvick Properties, LLC, a limited liability company controlled by Mr. Whiting (“Garvick”)," it reads.

"The shareholders and board of the Company have removed Mr. Whiting as a board member and as an officer and terminated his employment with the Company and any of its subsidiaries. The Company has joined the litigation against Mr. Whiting for alleged wrongdoing."

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