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On June 7th, 38 Studio's founder/owner, Curt Schillings, filed for a Chapter 7 bankruptcy. Chapter 7 is used by Companies/People in the US who are deep in debt and they file it (or forced to file by creditors) in a Federal Court. The court appoints a Chapter 7 Trustee who has vast powers and he/she is in charge of liquidating the company. This doesn't mean that all employees will be laid off, in the past, entire divisions have been sold off to another companies with all the employees with jobs.

This means had Curt Schillings not laid off every employee working for him, there was a possibility that they wouldn't have been laid off. What does this mean for 38 Studio's/Big Huge Games? It means that anyone with money, can buy up the studio's and open them under the same name, should the Chapter 7 Trustee choose to sell the studio's. This also includes all IP's owned under 38 Studio's.

Even though it seems Rhode Island won't get back it's total $75 million(plus interest) back, Governor Lincoln Chafee held a press conference shortly after Schillings filing of bankruptcy. He announced that 38 Studio's/Big Huge Games now belong in part to Rhode Island taxpayers and declared "We are going to do everything possible to maximize return on our investment".

"We have had in recent days discussions with investors that were and, to my knowledge, are discussing substational numbers, which indicated that there could be significant value to the assests," said earlier in the press conference by Jonathan Savage, who is council to the Rhode Island Economic Development Corporation(RIEDC). "I can say that discussions we've had have been in the tens of millions of dollars."

In an earlier article that Joystiq.com did, they asked Michael Pachter, an analyst for Wedbush Securities, for his valuation of the Amalur IP after the layoffs back in May. According to him, "Nobody is buying MMO's after Star Wars fizzled. I think valuse is low, probably $20 million or so. There is just no demand for game assests right now, as THQ proved when it tried to sell the Warhammer MMO. I think [Electornic Arts] could setp in, since they are the publisher, so you might see some alternative way to get 38 some bridge financing."

So, the entire Amalur IP, including Reckoning and the MMO Project Copernicus, are worth somewhere around $20 million, but because the IP's will most likely be sold off in an auction, it might not even get that much. As for those of us who've been holding out hope that Epic Games might buy the Amalur IP for their newly announced Epic Baltimore where core members of the Big Huge Games, will be working at. Epic Vice President Mark Rein has stated in at interview at E3 when asked about Kingdoms of Amalur: Reckoning 2 already in pre-Production if Epic games was interested in buying the Amalur IP: "We don't buy IP, we make IP."

The chances for Epic buying the Amalur IP are extremely slim it seems, but that doesn't mean Epic President Michael Capps won't do it, if the price is right.

As for Curt Schillings, there is some bad news for him. According to WPRI 12, 38 Studios and Schillings will face a formal investigation by Federal and State law enforcement officials, as a scandal slowly comes to light. Law enforcement officials are looking not just at the $75 million loan gaurentee, but also a $8.5 million loan from the Bank of Rhode Island that was made earlier this year as well.

According to WPRI, all of 38 Studio's is made up of four subsidaries, which are corporate entities registered as a limited liability corporations in Delware as 38 Studios LLC, the parent company. 38 Studios LLC said that it owes $150.7 million to 1,079 creditors, most of them in Rhode Island. 38 Studios LLC said that it owes $150.7 million to 1,079 creditors, most of them in Rhode Island. The largest is the $115.9 million owed to the RIEDC. The rest of the debts are unsecured debts, like unpaid wages to former employees, which 38 Studios LLC announced that it does not expect it will have any money to pay off it's unsecured creditors.

38 Studios Baltimore LLC, the former Big Huge Games studio, said it owes $5.5 million to 28 creditors on top of the EDC loan. The Baltimore division reported receiving $22 million between 2010 and 2011 from Electronic Arts as part of a "work-for-hire agreement."

The third company under 38 Studios LLC, Mercery Project LLC, "disclosed no assets and a $1.9 million debt to EA as part of a three-party agreement that also included City National Bank of Veberly Hills, Calif., and International Film guarantors in Santa Monica, Calif." The fourth and final company, Precision Jobs LLC, has reported no assets or liabilities.

What happens to Schillings or any high ranking 38 Studios LLC employees is up in the air. What this means however, is that 38 Studios was in a much more dire sitution then they had been letting on for the past year.

I will keep you all informed as I find more news about Amalur, 38 Studios, as well as Schillings.

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