Star Citizen is likely in financial trouble

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#1
The last thread got closed because it linked to a banned source, so I'm linking to the original source here:

https://beta.companieshouse.gov.uk/company/08703814/charges/AHMo7d0tVN50wGM-FC6tbyhYlss
https://beta.companieshouse.gov.uk/company/08815227/filing-history

CIG, the creators of Star Citizen, a game that has pulled in $150 million in crowdfunding, many times the original goal of $6 million, has applied for additional loan funding from a bank, in return offering up literally everything they own as collateral - the Star Citizen IP, all assets, all code, distribution rights and so on. From the attached PDF:



24. LICENCE

24.1 The Chargee, ( bank ), hereby grants to the Chargor , ( CIG ), an exclusive license, revocable only in accordnance with Clause 24.2, to develop, produce, exploit and otherwise deal with the Game.

24.2 The Chargee, ( bank ), may terminate the license granted pursuant to Clause 24.1 above upon the happening of an Event of Default which remains unremedied on the date failing 60 days after the the Chargee has given written notice to the Chargor of such Event of Default.
TL;DR The bank now own the game and provide a license to CIG to continue developing, if they miss a payment, all the backers get screwed. They can't apply for any additional loans or funding because they have nothing to offer - all their assets have a negative pledge clause.

Putting everything you own up as collateral is pretty rare - Ford did it just before the 2008 recession and it was a heavily remarked upon piece of news because mortgaging the company was, and is, a gutsy move that requires either a strong long-term plan requiring lots of capital investment, or is an act of desperation in trying to feed a furnace and the only thing left are the floorboards and planking upon which it sits. Either way it's a huge risk.

Obviously the terms of the loan aren't public, but this looks like it's more of the latter than the former - banks will look at the company's assets, net income, company structure, accountant reports, etc. and then usually offer (or refuse) a loan with strings attached, the number of strings depending on the financial shape of the business. CIG went to Coutts with their finances and came back with a floating charge, a fixed charge (on all assets), and a negative pledge. Evidently, their finances did not impress.
 
#6
Wow , that is a serious blow. Could be the biggest crowd funding disaster of all time if this fucking forever in development game never releases.

I popped $30 bucks in ages ago but I also have a few dumb ass friends who dropped a few hundo on ships and I would love to laugh in their faces (of course I want the game to release just saying I would be a dick and lord it over them for awhile).

This news will not go over well at the Star Citizen forums... they have to be going south with complaints and stressed out investors.
 
#16
This is what happens when you start a project with unlimited scope. Any crowd funded project that becomes highly successful at some point has to stop increasing scope.

The game was always in trouble, some people just didn't choose to believe it.
 

Crossing Eden

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#23
Wasn't this already addressed in the Star Citizen Verse Awakens thread?

So, that loan thing? It is actually real, but as usual Derek Smart has no idea how finances actually work so is spinning this as some sort of proof that SC is failing.

Original Reddit Thread.

Coutts & Co. is the bank of the rich and powerful of the UK, and this includes the Royal Family. Being accepted as a client requires you to have at least £1,000,000 in investable assets, not including real estate. If CIG was really in any sort of financial dire straits, or even doing well but without the proper amount of assets, Coutts & Co. would not have extended the loan. That they did actually shows (once again Smart putting his foot in his own mouth via incomprehension) that CIG is in good financial standing.

As to needing a loan itself, big businesses take out loans all the time for various reasons. Here's an article from 2015 on Apple taking out a $6.5 million loan due to needing some cashflow in the US.
 
#29
Is there any chance a publisher could pick up the project and finish it instead of taking a loan from a bank?
If CIG went bankrupt the assets would be up for sale, like what happened with Duke Nukem Forever. However, you don't always get a buyer, that Curt Schilling MMO that cost $110 million never got bought by another studio.

Wasn't this already addressed in the Star Citizen Verse Awakens thread?
Yes, but it's a big story that could do with it's own thread.

The Apple comparison there is invalid, Apple didn't put all of their factories, studios, the Apple Brand and products up as collateral for that loan like CIG.
 
#36
Be a huge disappoint if it's really in this much trouble , but things have been whiffy about the project for a while.

The fallout will be huge given how dedicated is fans are in defending it , if that fervour is turned back on CIG....
 
#39
It's about time they release this damn single player game at least.

I'd be fine if that's all that will make it out there, but we haven't seen it for about a year now.

All the best though, I want this game to succeed and at least release in parts.
Having only the alpha and nothing else to show would be a bit sad for me.
They seemed to get along 'just fine' with squadron 42 up to some time ago.
 
#42
Be a huge disappoint if it's really in this much trouble , but things have been whiffy about the project for a while.

The fallout will be huge given how dedicated is fans are in defending it , if that fervour is turned back on CIG....
Star Citizen fans are like this:

 
#44
Why would any publisher want to spend more money on this?
To wrap up the project and hope that it sell well when they release it? The game definitely has potential.

If CIG went bankrupt the assets would be up for sale, like what happened with Duke Nukem Forever. However, you don't always get a buyer, that Curt Schilling MMO that cost $110 million never got bought by another studio.
I see. Hope that things will turn out the best for them.
 
#48
This outcome was sadly predictable many years ago. This project had "mismanagment" written on it in golden letters, and like some strange cult, people were pouring thousands and thousands of dollars on it.

What a mess.
 
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