It's game over for video game company 38 Studios, which filed for bankruptcy on Thursday.
The company, owned by former Boston Red Sox pitcher Curt Schilling, has been roughing it out through a massive round of layoffs and a major funding cut.
During a press conference in Rhode Island this week, Gov. Lincoln Chafee said that the filing was not a surprise, but that he had not received advance notice of the move by the Providence-based company, Reuters reported.
"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," the company said in a statement to Rhode Island's Providence Journal.
Chafee said this week that the state is trying to help make the best of a "very, very bad situation," one that the governor inherited from his predecessor, according to Reuters. The company's bankruptcy means losing $21.7 million in assets—mostly personal property—and $150.7 million in liabilities, which includes $115.9 million owed to Rhode Island, the news agency reported.
38 Studios did not immediately respond to a request for comment.
In an unexpected move last month, almost 400 employees of 38 Studios and its subsidiary Big Huge Games in Rhode Island and Maryland were informed via email that they had been let go. In a message from management to staffers, the company chalked it up to "an economic downturn."
"To avoid further losses and possibility of retrenchment, the Company has decided that a company-wide lay off is absolutely necessary," the email said.
Two years ago, the Rhode Island Board of Economic Development approved a $75 million guaranteed loan to 38 Studios to fund the opening of new headquarters in the state. In May, the company reportedly bounced a loan repayment check to the state and missed payroll.
The FBI, the U.S. Attorney's office, and the Rhode Island Attorney General are currently investigating the company's $75 million state-backed loan, as well as $8.5 million in loans from Bank RI filed earlier this year, according to the Providence Journal.
In February, 38 Studios released Kingdoms of Amalur: Reckoning, its first and only video game title, which was co-published with Electronic Arts. Available for PC, Xbox 360, and PlayStation 3, the single-player, role-playing game received positive reviews and strong initial sales.
But the game couldn't save the company, which was founded in 2006 by World Series pitching hero Schilling, who helped carry the Red Sox and Arizona Diamondbacks to three MLB championships. 38 Studios also employed celebrity comic book artist and baseball enthusiast Todd McFarlane as executive art director.
According to 38 Studios' website, the company was developing Copernicus, an online multiplayer fantasy game from R.A. Salvatore and McFarlane. That project looks likely to end with the collapse of the company.
Reuters said the Chapter 7 filing indicated that the company plans to liquidate.
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