Collapse of 38 Studios sticks some devs with second mortgage

Employees told by Kingdoms of Amalur: Reckoning studio that the company had sold their previous homes, now being contacted by banks looking for missed payments.

Fallout from the collapse of Curt Schilling's 38 Studios continued today, as The Verge reports that a number of former developers for the Kingdoms of Amalur: Reckoning developer have been stuck with second mortgages due to the company's failure.

According to the report, when 38 Studios moved from Massachusetts to Rhode Island in 2010, it offered employees a relocation program that would see the company sell their old homes for them. However, "some" employees received notice from banks this week that they had missed mortgage payments on their old homes, at least one of which 38 Studios told the owner employee it had sold last year. An unspecified 38 Studios official told the site that it was trying to resolve the situation.

38 Studios' troubles first came to light earlier this month, when reports from the Rhode Island government indicated the company had failed to make a $1.125 million loan payment to the state's Economic Development Corporation. The studio eventually made the payment, but it also enacted a round of unspecified layoffs. Reports also surfaced that 38 Studios could not pay its employees as scheduled twice this month.

Between the original $75 million loan and interest, Rhode Island taxpayers could be on the hook for as much as $90 million as a result of the deal. The $75 million was secured by the Rhode Island EDC as a way to entice 38 Studios to move from Massachusetts to Rhode Island. Last week, EDC executive director Keith Stokes, who helped structure the loan, resigned from his post.

Kingdoms of Amalur: Reckoning shipped in February to a warm critical reception and sold 330,000 units in the United States alone during the month. Schilling said it sold 1.2 million copies, but Chafee called it "a failure," saying it would have needed to sell 3 million just to break even.

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"Collapse of 38 Studios sticks some devs with second mortgage" was posted by Brendan Sinclair on Fri, 25 May 2012 14:23:27 -0700
Filed under: Video Games


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