UPDATED: 38 Studios lays off entire staff in wake of financial problems

Posted on Friday, May 25th 2012 at 1:10 a.m.

Rumors have been swirling for two weeks about the economic health of 38 Studios after the State of Rhode Island indicated that the studio was late in paying its first repayment of the guaranteed loan the state had provided.

Giant Bomb is now reporting that 38 Studios have laid off their entire staff , effectively shutting down operations.  The layoffs also affect Big Huge Games.  Rumors have circulated mainly because the company itself has provided no insight into its current situation.

Our hearts go out to the staff of 38 Studios who are stuggling right now.

UPDATE: Alexander at Joystiq has provided some first hand observations on what is happening at 38 Studios. It is a sad look at what happens when a company is going through this tough process and employees try not to believe it. Additional reports suggest that Reckoning needed to sell 3M copies just to break even . I believe several of us had high hopes for this endeavor.

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