38 Studios misses payroll, struggles to pay off state debt

The grim news surrounding 38 Studios continues to mount, as new reports indicate that the Rhode Island-based company was unable to pay its employees this week. [Update: The studio lacks the funds to pay its state debt.]
The grim news surrounding Kingdoms of Amalur developer 38 Studios continues to mount, as new reports indicate that the Rhode Island-based company was unable to pay its employees this week. Over the past several days, the studio has been in talks with Rhode Island officials to discuss its serious financial woes, and today a spokesperson for the Rhode Island Economic Development Corporation confirmed that 38 Studios has missed its most recent payroll, reports local news group WPRI. The publication reports that 38 Studios employed 379 full-time employees as of March 15, with some 288 employees located within Rhode Island state. Meanwhile, Rhode Island Governor Lincoln Chafee said that 38 Studios is in the process of fulfilling the overdue $1.125 million loan payment it missed earlier this month. This news comes just a day after 38 Studios head Curt Schilling met with state officials asking for more funding for the company. Thus far, the state has not taken any action, though another meeting has been scheduled for Monday. In the midst of this turmoil, the EDC's executive director, Keith Stokes has stepped down from his position altogether. Stokes played a major role in providing 38 Studios with state funding, and helped coordinate the $75 million state loan the company received in 2010. Schilling publicly acknowledged his company's troubles on Thursday night, promising "We will find a way, and the strength, to endure" on his personal Facebook page. All of this financial trouble came to light just a few months after the company launched its first title, the Big Huge Games-developed Kingdoms of Amalur: Reckoning, which sold roughly 330,000 copies in the U.S. during its first week of sale. If it can secure additional funding, 38 Studios also plans to release its upcoming MMO, dubbed Copernicus. If the company does close, WPRI reports that Rhode Island taxpayers will have to make up for the failed loan by paying roughly $112.6 million (including interest) through 2020, and Joystiq says the studio's IP rights will go to the state. [Update: It seems that 38 Studios has not yet paid the state after all, as WPRI updated its story to note that the company's chief financial officer, Rick Wester, contacted the EDC this afternoon to inform the state that 38 Studios had insufficient funds to cover the $1.125 million payment. The EDC has since returned the studio's check. Governor Chafee added that the EDC would still accept an overdue payment if 38 Studios can somehow come up with the funding.]

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