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38 Studios Skips Payroll in Favor of Paying Back State [UPDATED]

Workers go unpaid as the studio works to make its owed $1.125 million payment to the state of Rhode Island.

38 Studios head Curt Schilling being accosted by reporters following yesterday's meeting with the Rhode Island EDC.

Coming on the heels of yesterday's circus-like meeting and press conference regarding the developing situation at 38 Studios, WPRI is reporting that the company is in the process of paying its overdue $1.125 million payment to the Rhode Island Economic Development Corporation, but is doing so at the expense of its own employees.

Current reports state that 38 skipped payroll this week, leaving the more than 300 full-time employees at the company without a paycheck. In addition, a source has told Joystiq that all temp and contract employees had been let go as of this week.

In the wake of the situation at 38, Keith Stokes, the executive director of the RIEDC since 2010 and architect behind the $75 million loan that brought the studio to the state from Massachusetts, has resigned.

38 Studios still has yet to comment publicly on the situation.

UPDATE: Just when you thought this whole thing couldn't get any worse, WPRI now reports that the check 38 Studios reps hand-delivered to the RIEDC has been returned due to insufficient funds.

Alex Navarro on Google+
267 Comments
Posted by Alex
38 Studios head Curt Schilling being accosted by reporters following yesterday's meeting with the Rhode Island EDC.

Coming on the heels of yesterday's circus-like meeting and press conference regarding the developing situation at 38 Studios, WPRI is reporting that the company is in the process of paying its overdue $1.125 million payment to the Rhode Island Economic Development Corporation, but is doing so at the expense of its own employees.

Current reports state that 38 skipped payroll this week, leaving the more than 300 full-time employees at the company without a paycheck. In addition, a source has told Joystiq that all temp and contract employees had been let go as of this week.

In the wake of the situation at 38, Keith Stokes, the executive director of the RIEDC since 2010 and architect behind the $75 million loan that brought the studio to the state from Massachusetts, has resigned.

38 Studios still has yet to comment publicly on the situation.

UPDATE: Just when you thought this whole thing couldn't get any worse, WPRI now reports that the check 38 Studios reps hand-delivered to the RIEDC has been returned due to insufficient funds.

Staff
Posted by AmishTechSupport

Oh no!

Edited by Darkecho117

What a bummer for all those guys and gals not getting paid. Hopefully this works out for them.

Posted by Obinice

Damn.

Posted by Acoustic

Harsh.

Edited by Jellybones

It's kind of amazing to me that this is legal.

Posted by forkboy

Wow, that is real rough for the staff there. I hope they are all able to fall into new jobs real quick.

Posted by Zachariahus

oh wow.

Posted by Dallas_Raines

Oh boy

Posted by BonOrbitz

one word reply

Posted by MovieFlask

Curt could use a few more shillings.

Posted by Cloudenvy

Yeah, this is looking pretty bad.

Posted by chilibean_3

Oh man. This is going to be over real quick for 38, isn't it? Good luck to everyone over there.

Also, Curt is looking terrible these days.

Posted by FateOfNever

Sad news. I wish all the employees at, or formerly at, 38 studios the best.

Posted by NegativeCero

This is unfortunate. I hope they get it together, but I doubt they'll survive when this is over.

Posted by Lyfeforce

Wow. I know it's not unheard of for a CEO or president or other senior level people to forego payment when things like this happen, but everyone in the company? What the hell !?

Posted by Demoskinos

Man, that sucks. Didn't much like KoA but people losing their jobs and not getting paid sucks no matter what.

Posted by mordukai

Lesson learned from this???

Don't take loans from politicians. 75 million, fuck sake, that's a ton of money. No matter what happens the tax payers of Rhode Island are left with the bill.

Posted by mrfluke

holy shit, rich should get out of there then

Posted by StressedOutCat

I still hope that the 38studios will turn things around, yet this doesn't look good.

Posted by Winternet

Nooooo. Rich needs to get to E3 and show on the bombcast . . . and get paid, of course.

Posted by depecheload

Skipping payroll means you're boned. No ways around it. This is it for them. Looks like Rhode Island is going to own the rights to Kingdom of whatever the heck it's called.

This is what happens when you borrow a fuckton of money and barely release anything. A revenue stream is kind of a vital part of any business.

Posted by AiurFlux

Now I feel sorry for them.

The suits get rich, the people with actual talent don't get a fucking paycheck. If I was them I'd start finding different options and getting the hell out of Dodge because that studio is going to sink like the Titanic. Can't say I'm shocked or sorry for Schilling and the rest of the higher ups, but I feel bad for the people that moved to Rhode Island with dreams that are now being crushed by fucking morons.

Economic stimulus at it's finest here folks.

Posted by Eribuster

Sad to see it has come to this. Kingdoms of Amalur: Reckoning didn't seem bad enough to warrant this.

Posted by harrymcback

Interesting that they choose to break what is a typical labor law in most states about having to pay employees for time worked so they could pay their obligation to the state.

I think Bob Salvatore needs to post some new eBooks to the 38 studios website next week to raise enough to make payroll.

Posted by iAmJohn

I'd like to say that hopefully someone will step in and save Big Huge Games, but something tells me that it would be Bethesda to do so.

Online
Posted by TadThuggish

Yeah, that's gonna work out.

Posted by Dallas_Raines

@depecheload said:

Skipping payroll means you're boned. No ways around it. This is it for them. Looks like Rhode Island is going to own the rights to Kingdom of whatever the heck it's called.

This is what happens when you borrow a fuckton of money and barely release anything. A revenue stream is kind of a vital part of any business.

The State of Rhode Island Presents: Kingdom of Amalur: Rekoning - Copernicus Online

Posted by DrDarkStryfe

And now this has become a political scandal.

A shame to hear this, I really enjoyed my time with Amalur, and the studio looked to have the chops to put out some quality work. I feel even worse for the workers, they are the ones getting the raw end of this.

Posted by freakin9

Reckoning indeed. Reckoning... indeed.

Posted by dead_eye_sam

Whoa.... I wonder if 38 is going to survive this... I hope they do.

Posted by laserbolts

Even though Amalur was shit I do feel bad for the people at 38. Hopefully they can bounce back.

Posted by MrMazz

Daaaamn I had no idea this was actually kind of big until one of my friends mentioned it and isn't a gamer in anyway.

Posted by ArbitraryWater

Well, they're pretty much screwed.

Online
Posted by Shaanyboi

Shit... :(

I wish all those let go the best.

Posted by Foggen

SAVE GALLUP

Posted by mpgeist

Bloody sock can't save you now Schilling!

Posted by Kidavenger

@DrDarkStryfe said:

I feel even worse for the workers, they are the ones getting the raw end of this.

How so? They can just go and get another job if they are good and completely wash their hands of this, the owners of 38 studios are going to lose all the startup capital they put in to get the company going and will likely be hounded by the state and other creditors for years, and the tax payers of Rhode Island are out however much is still outstanding on the loan. Employees did a shitty job and the game is behind schedule and they get off scott free.

Posted by CharAznable

Man, sorry to hear this. Best of luck to the employees.

Edited by Legend

Can we use the tip jar to tip Rich? Maybe as a thank you for the time trotters episode. :)

Posted by leejunfan83

Honestly who didn't see this coming years ago

Posted by supercubedude

Toast.

Posted by oldschool2112

"In the wake of the situation at 38, Keith Stokes, the executive director of the RIEDC since 2010 and architect behind the $75 million loan that brought the studio to the state from Massachusetts, has resigned."

The real criminal in this situation gets to walk away clean after hosing the people of R.I.

Posted by blacklab

Damn, Schill got phat fast

Posted by SlightConfuse

wow that sucks and is that even legal to skip payroll, unless they are getting it back next cycle

Posted by DrRandle

I'm curious what EA's input on this one since they were publishing. Were they just contracted to move the game around, or is there anything they can do to help get this set straight? Not that they likely wood, I'm just more curious than anything.

Posted by alternate

Delaying payroll could be a valid, if desperate, tactic if they were close to shipping the game but with no sign of income in the near future it is just postponing matters at the expense of working stiffs.. Also 300 full time employees is just rediculously over ambitious for a first time project.

Edited by ChrisTilton

This was unfortunately inevitable. I can't think of any startups that were funded by millionaires who have no idea how to make games that lasted more than a couple years, and that's simply because it takes that long to burn through all the money.

Have there been any startups in the last 5 or 10 years that started with millions that ended up being successful and are still around? I guess there must be at least one?

I hope Rich updates his resume.

Posted by Zaxex

Video game development shouldn't be this risky. It's common to hear people getting fired or studios closed because a game didn't sell as well as they would've liked.

The medium seems to be growing, I just hope that it becomes more sustainable.

Posted by Legend

@laserbolts said:

Even though Amalur was shit I do feel bad for the people at 38. Hopefully they can bounce back.

I still haven't played it myself, but if the reviews are any indication, Amalur actually seems to be a pretty good game.