Update 2:

We've received a statement from OnLive that confirms the company and its assets have been acquired. OnLive will continue operation under its new company, and a "large percentage of OnLive Inc.'s staff" will be rehired.

OnLive's statement is as follows:

We can now confirm that the assets of OnLive, Inc. have been acquired into a newly-formed company and is backed by substantial funding, and which will continue to operate the OnLive Game and Desktop services, as well as support all of OnLive's apps and devices, as well as game, productivity and enterprise partnerships. The new company is hiring a large percentage of OnLive, Inc.'s staff across all departments and plans to continue to hire substantially more people, including OnLive employees. All previously announced products and services, including those in the works, will continue and there is no expected interruption of any OnLive services.

We apologize that we were unable to comment on this transaction until it completed, and were limited to reporting on news related to OnLive's businesses. Now that the transaction is complete, we are able to make this statement.

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Reports are surfacing that the popular cloud gaming console OnLive has filed for bankruptcy and has laid off their staff, but will continue operating.We reached out to OnLive, but were told they don't respond to rumors, regardless of what they are. When asked if games would still be available and playable in coming weeks, we were told by OnLive PR that "Of course the games will be available."OnLive has neither confirmed nor denied whether their employees have been laid off, but have stated that OnLive will continue to operate.The original story can be seen below.

IGN is hearing rumors that OnLive may be shutting down as early as end of day today. Brian Fargo from inXile says he received an email from an OnLive employee which read:"I wanted to send a note that by the end of the day today, OnLive as an entity will no longer exist. Unfortunately, my job and everyone else's was included. A new company will be formed and the management of the company will be in contact with you about the current initiatives in place, including the titles that will remain on the service.It has been an absolute pleasure working with you and I’m sure our path with cross again." Mashable corroborates Fargo's email, saying "According to a source close to the situation, the company called an all hands meeting at 10am PDT, at which the entire staff was fired. Some staffers may be rehired as the company transitions to its next unknown iteration."IGN has reached out to our sources at OnLive but have yet to receive confirmation.We'll update with more information as we hear it.Developing...

Nic is the Editor of IGN Tech. He loves technology almost as much as Brand New, Boyz II Men, and Catcher in the Rye. You can follow him on Twitter and IGN