Report - Reckoning was a "flop", 38 Studios staff unpaid

Both official statements and anonymous whispers suggest Kingdoms of Amalur: Reckoning developer 38 Studios is seriously on the rocks, with employees going uncompensated and management resignations.

According to Joystiq's sources, 38 Studios employees have not been paid since May 1.

Staffers are normally paid twice a month. The source also noted that employee health care is expected to close down at midnight on Thursday.

The source was uncertain as to whether the studio would close but said the outlook is bleak.

At a press conference following an EDC meeting with 38 Studios founder Curt Schilling, as reported by NBC 10's Brian Crandall, Rhode Island governor Lincoln Chafee said experts had advised him Kingdoms of Amalur: Reckoning was a "flop" and definitely "not successful".

The developer's senior staff are said to be quitting, with former CEO Jennifer MacLean confirming her departure.

Chafee said he's doing everything possible to prevent the company's closure.

The Providence Journal reports 38 Studios has applied for "millions of dollars" in film tax credits but has not yet received the funding; it has also drawn a blank with external investment.

38 Studios' financial difficulties became apparent last week when the government of Rhode Island admitted the developer was in trouble. The company missed a $1 million loan repayment, and bounced a cheque despite lay-offs and payroll stalls.

Should the studio become insolvent, Rhode Island will own its IP, which analysts believe is worth $20 million; the Kingdoms of Amalur IP was originally developed by Big Huge Games, which 38 Studios acquired, and was a joint effort by ken Rolston, R.A. Salvatore, and Todd McFarlane. It is expected to spawn an MMO, code named Copernicus, which Rhode Island believes will launch in mid 2013. A work in progress video was released recently.