It has not been a small secret in the industry that Starbreeze has been having issues of late. So much so, that Rockstar decided to step in, paying nearly eight million dollars for a small Indian art studio down the road from Rockstar’s Indian offices. We also heard that Overkill’s The Walking Dead has been postponed, and in all likelihood, is not going to see its’ console port released at all. The downfall, according to the acting management team, was a result of mismanagement leading to the nearly 167.3 million Swedish Kronas worth of debt.

With that said, liquidation was set to begin soon enough, and some have found out the hard way how liquidation would hit. On June 4th, Starbreeze released a statement claiming some “reorganizational changes” were needed to reduce costs, effectively laying off sixty people or twenty-five percent of the current staff. This is clearly a cost-cutting measure for the present.

These cost-cutting changes will, however, only concern the Stockholm offices and will not go into effect immediately. Instead, Starbreeze says they will have all 60 employees laid off by November, saving three million Swedish Krona per month. Under EU laws and depending on the head count of the layoffs, every company is obligated to inform, consult, and in many cases support laid off staff. Under the EU’s Insolvency Protection Directive of 2008 (and the convention on Human rights), even if Starbreeze were to go insolvent (bankrupt), they would still be liable to pay the employees their due benefits.

So unlike back when Activision/Blizzard did their layoffs earlier this year in the US, these developers won’t be entirely without compensation. However, it is still sad to hear when anyone is let go from any company, let alone a talent developer. On this, acting CEO of Starbreeze, Mikael Nermark said, “In the past six months we have made a number of changes to the business following our strategy to focus on the core business.” He continued, “To make staff reductions is a tough decision to make, but necessary to enable Starbreeze to develop well long-term.”

One has to speculate that the studio will begin selling some more assets soon. With their pending eight million from Rockstar, the three million (a month) cost-cutting measure, and a mountain of debt still piling up, Starbreeze will have to act fast to secure a further 6 months. In either case, this was a teardrop in an oceanic problem that could work, though I highly doubt it will be the resolution to building problems.

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