So basically, the bank now owns Star Citizen, and they can’t get any further loans.
I feel bad for whoever it is at the bank that’s gonna be tasked to extract value out of that collateral once the loan defaults.
If it defaults and the IP belongs to the bank, can the backers file class action lawsuits against the bank? Hope they are smart enough to take into consideration potential claims from backers. Then again, I think the backers have no claims, as it is a form of donation.
I find it very unlikely that a bank will offer them money with an incomplete video game as collateral. It’s effectively a worthless asset. You can’t sell it to someone else, really, and believe me, I know. I worked at 38 Studios, and for all the talk about resurrecting the MMO they were working on, it’s really just impossible.
Banks are generally not dumb. They don’t fall for hype like consumers do.
I am sure it will be fine, maybe they just need some spare cash to covers snack bills.
Yep. I knew 2 people who worked there previously, and the stories they gave me were not pretty. Not a shock at all. Whoever the project leader(s) of this were should be ashamed of themselves for pissing away so much money for so little return. As for Roberts, well…it’ll be a tough road back into the industry if this does collapse, IMHO.
Turns out maybe that he who shall not be named might have been …right? gasp aloud
GAF thread has been closed now, devolving into a defenders vs detractors debate. Hard to really know what this is about as the reason for the loan and it’s value is unknown. There could be valid commercial reasons for seeking a loan (cash tied up in illiquid assets or long-term investment, hedging, etc), but the breadth of the collateral offered for security seems extreme.
On the other hand, what collateral can be offered by a single IP, unreleased game development firm that is of value?
Basically it’s just IP, code and art assets right now that is of value which an investor may accept. The workstations used by employees are practically scrap if they are offered for auction.
Maybe that star trek style sliding door… a fan or museum may bid quite some for it…
I haven’t really followed development progress, so my question is:
Is anything they are eventually planning to release, coming out this year? And I mean finished, 1.0 , fully playable.
I think the silver lining is that they would not have taken a loan unless they felt that with the incoming funds, the game can be finished and released.
Hahahahahaha
Nope. SC 3.0 is apparently due next month or the one after after being pushed again (I think) - but that is still a long, long, long way from gold, despite the versioning. Some poor sods still think SQ42 is due for release this year, but given we haven’t actually seen anything of that since basically the Gary Oldman trailer/intro scene reveal well over a year ago, I highly doubt that is ready to go, even if you buy their ‘we don’t want to spoil the story’ marketing.
I’d be pretty surprised if this were a bank, to be honest. It’s much more likely a fund or funds. I suspect Coutts is just acting as security agent.
Actually, I take that back, having read the deed of charge. The margin isn’t anywhere near high enough for a fund to take this sort of risk. I can only imagine the loan is pretty modest in size and pretty short term (some kind of working capital facility, basically). A 2% margin is not what you’d expect for a conventional loan to a company like this which has no visible revenue stream or tangible assets.
So are we nearing the end of the long, lazy death spiral now?
Guess I should drop over and check on how Limit Theory is coming along.
So many depressing stories in this genre, but I still have hope in Josh putting something together.
Maybe. I haven’t checked in months out of fear.
To me that’s the most troubling–it’s a lot of collateral to put up for what sure looks like a very small loan. If you’re putting up EVERYTHING to secure a small loan, that implies…yikes. Payment to necessary creditors (keeping the lights on?) or making payroll…
Maybe, but then again if you’re going to give a loan to a company with no product yet and no valuable physical assets (I assume they lease their buildings), wouldn’t you take security over everything they’ve got, regardless of their status? It could go either way really.
Yes, but if you’re CIG, under what circumstances are you willing to take that collateral risk? Either you’re so incredibly sure you’re going to have no problems paying back on time (in which case, why risk the loan?) or that sort of risk is your only alternative.
Well, if they can’t pay back the loan they’re totally screwed anyway. It’s not like they could bounce back from Star Citizen being a failure (whatever that means given its funding model). The risk is totally binary.
And yet it’s the same behavior that 38 Studios took at the end of their run, is it not? 38 Studios, with a monthly burn of $2-4 million was trying at the end to squeeze out tax credits for $7 million for an MMO that was at least 12-18 months away.