Starbreeze has announced it is pulling out of a deal to publish System Shock 3, selling the rights back to developer Otherside Entertainment for what it claims will be a full reimbursement of its original $12 million investment.

The rights to classic first-person survival role-playing title System Shock and its sequel were lost when Looking Glass Studios dissolved, eventually ending up in the hands of an insurance company while some of those involved in its creation would wind up working on spiritual successor BioShock. It wasn't until a fan's multi-year effort to retrieve the rights succeeded in 2013 that things could progress, and progress they did: System Shock 2 was re-released, followed by plans for a remastered System Shock, and the promise of a brand-new System Shock 3 complete with support from Warren Spector. By 2017, that latter effort had progressed to the point where publisher Starbreeze was willing to splash the cash, giving developer Otherside Entertainment $12 million (around £9.34 million) in exchange for the rights to publish both the PC and console versions of the game.

Since then, however, things have not been going smoothly for Starbreeze: The first hint of serious financial problems at the company came when it announced it was backing out of the StarVR joint venture with Acer, followed by severe cost-cutting measures, the ouster of its chief executive and application for reconstruction, and the cancellation of the StarVR developer programme.

Unsurprisingly, then, Starbreeze isn't in much of a position to continue assisting Otherside with development of the game - and, accordingly, it's reached a deal to sell the publishing rights back in exchange for what the company 'expects' to be a full reimbursement of the costs associated with the game's development so far.

'I believe this is the best solution for us, although it is sad that we cannot complete the project with Otherside,' claims Starbreeze's acting chief executive Mikael Nermark. 'System Shock 3 is a fantastic title developed in cooperation with the industry legend Warren Spector and I am looking forward to seeing the game released.'

Otherside, which is currently facing a backlash over the buggy release of crowdfunded first-person dungeon crawler Underworld Ascendant, has not commented on the agreement.

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