38 Studios and Big Huge Games shutting down

38 Studios is shutting down operations at subsidary Big Huge Games and its own studios, according to reports.

The company's recent financial struggles, layoffs, and unpopular standing with Rhode Island taxpayers is only the beginning of its troubles.

A letter to Gamasutra confirmed the rumor: 38 Studios is issuing a company-wide layoff:

The Company is experiencing an economic downturn. To avoid further losses and possibility of retrenchment, the Company has decided that a companywide lay off is absolutely necessary.

These layoffs are non-voluntary and non-disciplinary.

This is your official notice of lay off, effective today, Thursday, May 24th, 2012.

An anonymous source emailed Kotaku earlier on and said that employees have not received a paycheck since April 30 and only found out they weren't receiving further pay on May 15, when their checks did not arrive. Their medical insurance runs out at midnight.

"We found this out when an employee's pregnant wife was told by her doctor, this was on Tuesday 22nd May this week," the source wrote.

Our thoughts go out to the former employees of 38 Studios and Big Huge Games during this difficult time.

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