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AMC, Smilegate Backed Out of Funding Talks With Telltale a Day Before Closure

Telltale Games’ sudden catastrophic laying off of nearly all of its 274 employees with no notice, no severance, and barely a week’s worth of health care came just a day after two potential investors walked away from potential funding talks on Thursday, sources tell Variety.

Both AMC and Smilegate were in discussions to invest in Telltale Games, a deal that management had been working on to essentially save the company.

On Thursday, Telltale held a meeting to tell its employees that negotiations with AMC were going well and that management expected confirmation of funding within a few weeks. One employee said it was painted as a done deal.

But on Thursday afternoon, one of the two companies backed out. The other company exited negotiations Thursday night. 

It’s not known why both companies decided to back away from the financing deal on the same day. Lionsgate, too, decided to write off the funding it had already invested in Telltale.

It’s unclear whether Smilegate, a massive Korean developer of online and mobile games, or AMC, with a stable of massive original properties, were hoping to have Telltale work on new games with them or simply wanted to invest funding.

While AMC retains the rights to “The Walking Dead” television shows and can license games based on it, Telltale’s popular “Walking Dead” games had all been based on Robert Kirkman’s comic books through an unrelated deal made with Kirkman’s Skybound Games. AMC does have two mobile games based on “The Walking Dead” television show and has shown an interest in expanding its investment in gaming.

AMC declined to comment when reached for comment.

Both companies backing out Thursday led to the essential closure of Telltale the next day.

Friday afternoon, the company held a meeting to tell all but two dozen of its employees that they were being let go effective immediately. They were issued paper paychecks for compensation through Friday and told they had to vacate the building in 30 minutes. Email was shut down immediately. Employees were given no severance and health care runs out at the end of the month. Everyone in attendance was encouraged to apply for unemployment by the end of the day.

Telltale Games had reportedly been going through internal turmoil with employee complaints of a toxic work environment, long hours, and confused management. Many employees inside the company were aware the studio had major financial trouble as well, and that it could close one day, but the worst that was expected in the immediate future was another round of layoffs.

The remaining staff at Telltale are working to finish up the port of “Minecraft: Story Mode” for Netflix and the company has said it is courting potential partners to get the remaining two episodes of “The Walking Dead: The Final Season” completed and published. Telltale already released the first two episodes of the game to fans, some of whom had pre-paid for the entire season.

On Monday, a former employee filed a lawsuit on behalf of all of those let go last week against Telltale Games, saying the company violated state and federal labor laws with the mass layoff because it didn’t give proper notice.

Co-founder and former CEO Kevin Bruner, who sued Telltale Games seeking financial damages over the summer, told Variety Tuesday that he is still shocked over the sudden closure.

“I had no idea such an action was contemplated or necessary,” he said. “I haven’t been involved with the company for a year and a half and was under the impression the new team was doing fine. ‘Walking Dead 4’ looked great and I still had many, many friends working at the company. I wanted nothing more than to see Telltale succeed. I’m devastated.”

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