38 Studios, the video game company owned by former Red Sox pitcher Curt Schilling, has laid off all 400 of its employees, according to local reports.
The six-year-old company received a $75 million loan guarantee from the Rhode Island state government in 2010 in order to move their offices from Maynard, Massachusetts to Providence, Rhode Island.
The first signs of trouble came on May 13, when the company failed to make a scheduled $1.1 million payment on this loan.
Unsuccessful in its attempts to secure outside investment for a bail-out, the company had already lost its chief executive and chief technology officer before the announcement that all staff were out of work today.
In an interview with the Boston Globe, Rhode Island Governor Lincoln Chafee says the situation for 38 Studios did not look good.
"It’s an unfolding tragedy here in Rhode Island,” Chafee says.
Despite his successful baseball career, Schilling has ‘tapped out’ all his funds in the company, with US$30 million invested.
In the six years the studio was open, they released one game, Kingdoms of Amalur: Reckoning, which received mixed reviews and which Chafee claims was ‘a flop’.
Chafee says if the game had performed better that the studio might have been able to attract outside investors and would not be in the situation it is in.
However, Schilling has argued that the game ‘outperformed’ expectations, and sold more than 1.2 million units in its first 90 days of release.
The company’s latest project, an elaborate MMORPG known by the working-title ‘Copernicus’, has already tied up tens of millions of dollars. Judging by the current state of things for 38 Studios, it will never see the light of day.