The complaint is pretty nasty. If you ask SK, this isn't a case of middleware that simply doesn't deliver on its promises, but a company that has intentionally lied about their product from Day 1. Supposedly Epic intended to fuck them over, and wanted for them to fail. How this makes any sense for a middleware company is beyond me, but oh well.
From the complaint:
"Epic's actions were intended to and did cause one or more of Silicon Knights' business partners to rescind their contracts with Silicon Knights and replace them with contracts whose terms were substantially less favorable to Silicon Knights...."
Sounds like they are taking it up the ass from Microsoft, after missing a bunch of milestones.
Multiple times they re-iterate that they were on the verge of going out of business, and would have done so had they not started work on their own engine. That may just be made-up drama to paint them in a more sympathetic light.