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Rhode Island governor Lincoln Chafee gathered his experts on finances and bond laws to discuss the dire situation of Kingdoms of Amalur: Reckoning publisher 38 Studios today, opening with a clear summation: "It's not a good situation; I'm not here to deliver good news."

Just an hour before the conference, news broke that all 379 staff of 38 Studios and its property Big Huge Games had been laid off. Chafee's adviser John Savage answered the first question regarding the layoffs: "In my conversations today, there were no discussions about layoffs."

Chafee agreed, saying "nothing changed today," and the tone of the conference was effectively set.

Of the layoffs that his administration wouldn't acknowledge, Chafee suggested, "Well, they could be rehired. Some investor might come in."

In a related optimistic response, Chafee said he believes 38 Studios will be able to hit its payment benchmarks, banking on the "emotional attachment" of gamers to the Amalur universe. "I would suspect that they are going to be on time and at the proper amount," he said. "All that investment, all that adherement to benchmarks. I think is going to be accurate in the end."

At the moment, Chafee said he couldn't assign blame in the situation to anyone specifically, but he did say "that's gonna come over time if we're not successful in getting this company financially solvent."

To keep 38 Studios solvent will be "very, very expensive," Chafee said, taking "tens of millions of dollars" in marketing alone. These projections come from "industry experts," who also told Chafee that he was doing the right thing the entire time. "Every indication I got from all this process is that everything is going according to the business plan," Chafee said.

"I asked the experts: What could have we done better? And they were telling me, 'You did everything right. You put your money in, you supported the game, and you're better off not meddling.' If I had meddled there wouldn't be all this violence in these games, all the sexism."

Kingdoms of Amalur: Reckoning sold 1.2 million units in its first 90 days, but for 38 Studios to break even it would have had to sell 3 million, Chafee said. Even though 38 Studios founder Curt Schilling said the game "outperformed EA's projections," Chafee was forced to disagree.

"The game failed," he said.

This article was originally published on Joystiq.