38 Studios Skips Payroll to Pay Off Debts, Debt Check Bounces

[News Portal]

The tragic tale of Kingdoms of Amalur developers 38 Studios continues, with today revealing that the company skipped payroll payments to its staff this week in order to pay off its debt to the Rhode Island Economic Development Corporation - a debt that runs to the tune of $1.125 million. The company's 300 employees have been left without payment, and sources allege that all temp and contract staff have been let go. WPRI in the US is now reporting that the $1.125m check, which was personally hand-delivered to the RIEDC, has now been knocked back due to insufficient funds. 38 Studios have continued to make no statement on the matter.

Source: GiantBomb

Read full article by GON News

[akira675]

Eh.. I was unpaid for ~three months in a Melbourne based games company. They think they can get away with it because the staff love their work.. And hey, most of the time they do. More fool us for staying on.

[Tim Colwill]

Same here at Interzone Studios in Perth - unpaid for about three months, scattered/irregular pay for another three. Had to leave, couldn't take it any more. Sad times.

[Matty]

I remember reading the PPCP write up on Interzone. That was really bad.

[Jez]

Has always bugged me that repaying debts gets prioritised over the paying of employees in these kinds of cases. :\

[coatsy22]

Has always bugged me that repaying debts gets prioritised over the paying of employees in these kinds of cases. :\

I think it comes down to debtors can affort better lawyers, so grab a bigger slice of the pie

[bink]

i hate to be that guy but it's cheque.

makes for a confusing read in the queens english.

[Jez]

Has always bugged me that repaying debts gets prioritised over the paying of employees in these kinds of cases. :\

I think it comes down to debtors can affort better lawyers, so grab a bigger slice of the pie

That's a fair point, but I think the priority of payments under liquidation is enshrined in law, doesn't seem very democratic.

[Mekon]

Has always bugged me that repaying debts gets prioritised over the paying of employees in these kinds of cases. :\

In Australia, employee entitlements (there's that word again!) come first.... followed by secured creditors (aka the banks), then everyone else.

edit: The existing legislation (which classified employees as unsecured creditors) was amended under the Howard government - the Employee Entitlements Bill (2000). The Gillard government took it one step further with the Fair Entitlements Guarantee and guarantee worker's entitlements out of the tax-payers pocket (although presumably they make sure they get everything they can out of the insolvent company and its directors).

Things are different in the US, as always. Regulation is anathema to them.

[Krogan]

Well this is what happens when you spend this much money making a bad product, really has nothing to do with the gaming industry. Is it really so hard to make a GTA style fantasy game, really? It would be like printing money.

[akira675]

Well this is what happens when you spend this much money making a bad product, really has nothing to do with the gaming industry. Is it really so hard to make a GTA style fantasy game, really? It would be like printing money.

As is typical, enter the "think he knows all" knows nothing commentator.
I doubt they had access to Rockstars GTA engine, so yes. It is hard. The money doesn't get printed until after the game is shelved and finding a publisher willing to pay you to develop not only a game, but an engine to support it... that's hard to do. But of course you know better, so comment away...

[Sphinx2000]

Has always bugged me that repaying debts gets prioritised over the paying of employees in these kinds of cases. :\

As they are still trading, I would assume they are trying the option to keep the business running i.e rather than going bankrupt to the debt, and no jobs for all..

If they go bankrupt, then insolvency to creditors begins..

[baghwan]

I like how the government of Rhode Island broke the release date, June 2013.

Rhode Island governor Lincoln Chafee told attendees of a 38 Studios-related press conference that the long awaited 38 Studios MMO – only known currently as "Project Copernicus" – is set to launch in June of 2013. Chafee said, "What I understand is Copernicus is June of '13."

Considering we've literally never heard any information on the Amalur-based MMO (aside from the fact that it's an Amalur-based MMO), it's a bit hard for us to believe that the game will arrive by next year. "I said from the beginning that it was a risky enterprise," Chafee told press of the troubled business deal between 38 and Rhode Island.

38 Studios is supposed to start paying back its $75 million loan – facilitated by the state of Rhode Island and supported by bond investors – by the beginning of 2013. It's unclear how 38 will afford those payments, but Chafee repeatedly pointed out 38's intention to seek private capital (read: more money from private investors – and not from the state). Said private capital has yet to be secured, Chafee said.

http://www.joystiq.com/2012/05/18/rhode ... a-june-20/



Looks nice, but best not get your hopes up.