38 Studios declares bankruptcy, under federal investigation

Shocked? Probably not. Surprised? Definitely not. Rhode Island-based 38 Studios, developer of Kingdoms of Amalur: Reckoning, has declared bankruptcy. The studio was experiencing financial difficulties, layoffs were a fact and it all went overboard when employees were shown the door and it broke bonds with Big Huge Games.

The company had reportedly failed to secure further financing as publishers looked the other way, and when coupled with missed payrolls, insurance cut-offs and the layoffs mentioned above, the outcome was inevitable.

“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,” said a 38 Studios spokesperson. “After ongoing negotiations with the State of Rhode Island and potential investors and other interested parties, the Company has been unable to find a solution to the current stalemate.”

As if that wasn’t enough, company executives will soon be facing the joint force of the Rhode Island State Police, the FBI, the U.S. Attorney and Rhode Island Attorney General’s office, all of which will be “working together to investigate activities that have recently come to light at 38 Studios.”