38 Studios announces bankruptcy

38 Studios announces bankruptcy
Seth Tipps

By Seth Tipps

June 7th 2012 at 7:18PM

Federal and Rhode Island Police investigation of studio underway

38 Studios has declared bankruptcy a month after news broke that the company was late on a $75 million loan,

The studio, founded by Red Sox pitcher Curt Schilling, moved to Rhode Island when the state's economic development corporation offered the state-guaranteed loan on the condition the Kingdoms of Amalur developer relocate from neighboring Massachusetts.

The company was unable to secure more financing as publishers shied away from deals and a concerned Governor cut his losses, declaring the studio would have to seek help elsewhere.

After several employees reported missed payroll, insurance cut-offs, and layoffs, 38 Studios and its Baltimore-based companion Big Huge Games were shuttered, putting nearly four hundred developers out of work.

The news of bankruptcy does not come as a surprise, but is a dissappointment to fans of the Studio's only release, Kingoms of Amalur.

The game sold over 1.2 million copies, and 'Coopernicus' - an MMO set in the same universe - was due for a 2013 release.

"This action comes after several weeks when the company has reviewed, considered and received the recommendations and advice with respect to potential avenues for relief that are currently available," a 38 Studios spokesperson told the Providence Journal.

"After ongoing negotiations with the State of Rhode Island and potential investors and other interested parties, the Company has been unable to find a solution to the current stalemate."

Bankruptcy is not the only worry for the company executives as Rhode Island State Police superintendent Col. Steven G. O'Donnell said that his agency, the FBI, the U.S. Attorney, and Rhode Island Attorney General's office would be, "working together to investigate activities that have recently come to light at 38 Studios."