And here we were thinking that the payment $1.25 million towards their loan amount, and a new flyby trailer for MMO “Project Copernicus”, somehow indicated that 38 Studios was back on the straight and narrow. Turns out we were wrong: things have continued to deteriorate since we last touched base with the developers of Kingdoms of Amalur: Reckoning.

A source has told website Joystiq that none of the remaining staff members at 38 Studios have received their salaries for May. Ordinarily, staff at 38 Studios get paid on the 1st of each month and then on the 15th. We’re nearly at the end of May and none of the staff have received a cent. On top of this, all employees’ health care benefits will cease before the end of this week.

Both the CEO Jennifer MacLean and the senior VP of product development John Blakely have left the company. This came to light via updates to their LinedIn profiles, which indicate that they resigned from the company in March and May respectively.

The Rhode Island Governor, Lincoln Chafee, has assured the public that he is trying everything possible to ensure that 38 Studios doesn’t close down. Why does he need to reassure the Rhode Island public? Because if 38 Studios dies, then their unpaid loan amount, which would be substantially higher than the initial $75 million thanks to interest rates, will have to be covered by the Rhode Island tax payers.

Joystiq’s source is uncertain as to whether “Project Copernicus” will ever see the light of day. In fact, their source cannot say with confidence as to whether or not 38 Studios will still exist for much longer.

Source: Joystiq Article 1 and Article 2