Games companies, and likely other industries, sometimes include non-compete clauses in your contract, meaning you can't actively seek employment with other companies while contracted to them. They could easily just be trapped.
European Union has employee-protections that are stricter. For Germany for instance, a non-compete clause is only valid for a certain area - which would be smaller than entire Germany unless properly supported, because it would be unreasonable to stop someone from getting a job in an entire country - and requires actual payments to maintain. If they have a non-compete clause, the non-payment would immediately invalidate it.
As being from Germany, having worked in and following the local industry, I wouldn't be too surprised if there's some truth to this. However, I'm having a hard time believing they didn't pay period, for months. All I can find about it (which is weirdly enough not much from German sites or the usual news portals) is that payments have arrived late (as in 1-2 weeks late), which seems more believable.
I dunno, I heard about Crytek's, well, unique financial handywork, but this seems a bit much. Not saying it's wrong yet tho. Also, if you work in Germany for 6 months without payments, you're a fucking idiot and clearly should read up on labor rights (and job offers from elsewhere).
Always sucks when this happens... especially when a studio falters right before Christmas.
To all Ex-Crytek folks who're reading this thread: We're still actively looking for top talent and are working on some super exciting stuff. Just send your resume and reel / folio to email@example.com
Moon is a distributed studio, which means that you wouldn't even need to relocate