38 Studios opts to pay loan, not employees

The state of Rhode Island is facing a terrible setback after disappointing sales from 38 Studios and Kingdoms of Amalur. The company, which got started in Massachusetts and was lured to Rhode Island with a massive $75 million loan from the Rhode Island Economic Development Center, is facing a major debt crisis after missing a $1.125 million payment. It is now being reported that the company will opt to pay that loan, rather than play employees.

Current employees at the studio were unable to comment on the matter, but things looked quite grim outside the studio, reports local news WPRI. The studio counts 379 full time employees, with over 288 of them working in Rhode Island.

While paying off the debt might stave off some problems for 38 Studios, the employees and those surrounding the loan deal are being affected. 38 Studios has fired all temp employees, as well as all those on contract. The executive director for the state's Economic Development Corporation (EDC), Keith Stokes, has also resigned his position. Rhode Island Governor Lincoln Chafee has not named a replacement yet.

38 Studios, founded in 2006 by former Boston Red Sox pitcher Curt Shilling, has received $49.8 million of a $75 million loan from the state. It looks as though taxpayers in Rhode Island will more than likely have to front the bill should the studio go under.

Things might not be lost, as Rhode Island is also helping to pay for the next game from the studio. The supposed MMO titled "Project Copernicus" is currently in development, though nothing about the game has come to light, including release schedule.

UPDATE: It is being reported that the check, hand delivered to the EDC by 38 Studios, has been returned. The company's chief financial officer has confirmed that there is not enough to cover the $1.125 million owed at this time.