Word from Flagship Studios is that they remain afloat. They concede that most employees were laid off, but say they still retain the rights to HGL and Mythos, and that the core founding group remains intact. It’s unclear if they cut a deal with their foreign creditors or are holding them off with legal maneuvers, or how so few employees can support their ongoing projects, but the dream lives on. The full statement:

San Francisco, CA (July 14, 2008)—Flagship Studios has announced today that despite rumors to the contrary, the company is still operating.

“It is with deep regret that I must announce that Flagship Studios has laid off most employees. However, the core management and founding team members are still at Flagship.” said Bill Roper, CEO of Flagship Studios. “The past five years have been an incredible experience for us, but unfortunately, we couldn’t sustain the size of the company any longer.”

Flagship Studios owns the rights to all its technology and IP, including Hellgate: London and Mythos. Due to the current situation, Flagship will not be taking any new subscribers for Hellgate: London, and all current subscriptions will not be billed.

Flagship wishes to extend their heartfelt thanks to those that have supported the company and games over the past five years.