It would seem the tale of 38 Studios has come to an abrupt and untimely end. Gamasutra posted a copy of an official notice of lay off sent out to all employees at 38 Studios and Big Huge Games.
"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."
According to Rhode Island governor Lincoln Chaffee the problems for 38 Studios started when Kingdoms of Amalur: Reckoning failed to sell as well as hoped, and according to him it would have needed to sell 3 million copies to break even.