Workers at 38 Studios were informed of the mass non-voluntary and non-disciplinary layoffs effective immediately via email on Thursday, according to The Associated Press.
The layoffs came after the Providence-based company reportedly failed to repay debt to the state, amounting to $1.1 million which was due last week to the state economic development agency. 38 Studios also failed to meet payroll for its staff in both its Providence office and its Maryland subsidiary, Big Huge Games.
After an incentive to move its headquarters from Massachusetts in 2010, the state allotted Schilling's company a $75 million loan guarantee backed by tax payers. Funding 38 Studios promised mass amounts of jobs and tax revenue for the state, which has had at least, if not more, than 10 percent unemployment rate for the past three years. According to the state, 38 Studios collected nearly $50 million of the funds from the loan guarantee, as reported by Reuters.
Governor Lincoln Chafee, who opposed the loan guarantee in 2010, said the company faced grim times, namely debt, which ultimately led to the firing of the staff. Chafee said state officials met with 38 Studios last week in a series of emergency meetings to discuss strategy, since the state will be responsible for the debt if the company flops, and ways for success without burdening taxpayers.
Employees were not the only ones to exit, though not voluntary, 38 Studios. According to the Boston Globe, CEO Jen MacLean, along with another unnamed top executive, quit and removed the company from her Linked In profile.
However, Schilling said his team has shown breathtaking resilience through these incredibly challenging times on Tuesday on Facebook despite the layoff email, which said the company experienced an economic downturn, according to WPRI-TV. The television station also reported the company isn't incorporated in Rhode Island, but rather Delaware as a limited liability company, which would deem 38 Studios ineligible for tax credits in the state.
Curt Schilling, a 45-year-old sports legend who led Boston to the World Series back in 2004 and avid gamer, formed 38 Studios in 2006 to break into the games market. Its first game, Kingdoms of Amalur: Reckoning, was released in February, but suffered from poor sales, according to Gov. Chafee
The game failed, Chafee said Thursday. That was integral to the success of the company.