Provocative public statements made by Rhode Island governor Lincoln Chafee scared away an investor which was close to bankrolling a sequel to Kingdoms of Amalur, according to Curt Schilling, boss of beleaguered developer 38 Studios.

The former pro-baseballer told the Providence Journal that an unnamed publisher pulled out of a $35 million deal to finance the sequel within 72 hours of Chafee's announcement that the US state was doing its best to keep the company solvent.

Schilling also claimed that Rhode Island officials reneged on a deal to approve film tax credits to which the studio was allegedly legally entitled. Not only that, but they also refused to honour a promise to defer a $1.12-million loan repayment to allow 38 Studios to pay its staff.

The 38 Studios founder, who reportedly stands to lose $50 million of his personal fortune, denied he ever sought a government bail-out.

As reported earlier today, 38's planned sequel to recent RPG Kingdoms of Amalur would have boasted improved visuals, no loading time, expanded and improved combat animations, and fewer branching quests.

38 Studio's laid off its entire staff last week and closed down Maryland-based subsidiary Big Huge Games.