Financial troubles are deepening for
A first loan re-payment of $1.125 million was owed to Rhode Island’s Economic Development Corporation (EDC) this week, but 38 Studios has been unable to come up with the funds.
According to the office of Rhode Island Governor Lincoln Chafee, a cheque for that amount was hand-delivered to the EDC by 38 Studios. However, a call from the company’s chief financial officer followed shortly afterwards, advising the EDC that there were insufficient funds for the cheque to be cashed.
EDC spokesperson Judy Chong has confirmed that 38 Studios has advised the organisation that it is currently unable to pay its employees. As of 15 March, 38 Studios employed 379 full-time staff. Further reports suggest that all contracted and part-time staff have been let go this week.
The EDC has stated that it is still willing to accept the overdue $1.125 million if 38 Studios can come up with the money.
While Kingdoms of Amalur: Reckoning received positive reviews, it is thought that the source of the funding problems is 38 Studios’ long-term MMO project which the company has been working on prior to the development of Reckoning (which in itself was developed by Big Huge Games and re-branded for the Amalur universe when that team was bought-out by Schilling’s studio).
38 Studios has so far received $48.9 million of the $75 million Rhode Island loan.
Documentation from the EDC suggests that 38 Studios put up all present and future intellectual property (IP) as collateral on the loan, meaning that if the company defaults on its loan the Amalur IP will be owned by the state of Rhode Island.