Kingdoms of Amalur: Reckoning creators 38 Studios shut down after failure to repay state loans

Kingdoms of Amalur: Reckoning creators 38 Studios laid off its entire staff on Thursday according to a report at The Verge. Both the studio’s Rhode Island office and its subsidiary Big Huge Games in Maryland were shut down.

WPRI reported that the following notice was issued to all employees at 38 Studios and Big Huge Games: “The Company is experiencing an economic downturn. To avoid further losses and possibility of retrenchment, the Company has decided that companywide layoff is absolutely necessary. These layoffs are non-voluntary and non-disciplinary. This is your official notice of lay off, effective today, Thursday, May 24th, 2012.”

The company’s disintegration happened swiftly. Founded in 2006 by baseball player Curt Schilling, 38 Studios released its very first game, the aforementioned Reckoning in February, with publishing handled by Electronic Arts. The game performed admirably for a new intellectual property, selling more than 1 million copies over the past three months. 38 Studios has also been hard at work on “Project Copernicus,” an MMO set in the Kingdoms of Amalur universe.

On May 15, though, it was reported in The Providence Journal that 38 Studios had failed to make payments on a $75 million loan it received from the state of Rhode Island, given by the Rhode Island Development Corporation development fund, in 2010. Its first payment of $1.125 million to the state was due on May 1, but the company failed to fulfill the payment until May 18, before which Rhode Island governor Lincoln Chaffee and officials with the Development Corporation visited the studio to review “all the financials” in the interest of protecting Rhode Island taxpayers.

The director of the Development Corporation has since resigned. The initial $75 million loan was given to 38 Studios under the auspices of creating at least 450 jobs in the state of Rhode Island, but as of May, 38 Studios only employed 379 people and only 288 of those employees were at the studio’s headquarters in the state.

Kingdoms of Amalur: Reckoning was made by something of an all-star team of creators. Comic artist Todd McFarlane, writer R.A. Salvatore, and Ken Rolston, lead designer of The Elder Scrolls IV: Oblivion, all had a hand in the game’s development. In the aftermath of the studio’s dissolution, it’s up in the air what will happen to the Kingdoms of Amalur property. It’s not impossible that the company and all its intellectual property will be seized by the state of Rhode Island and auctioned off in order to create enough revenue to reimburse taxpayers for the initial $75 million investment in the studio.

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