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OnLive explains layoffs, promises uninterrupted service

Troubled cloud gaming service says restructuring plan required it to fire its entire staff but that it is in the process of rehiring many of them.

OnLive in action.

Financially troubled OnLive said today it plans to continue operating under the OnLive name and promised users that its services will "continue without interruption."

The announcement comes two days after reports of a major corporate shakeup in which the cloud gaming company suddenly fired all of its employees and was allegedly prepping for a bankruptcy filing. The company later confirmed that the company assets had been sold to an unnamed suitor.

The company said in a statement today that all customer purchases would remain intact:

All OnLive Devices and Apps, as well as all OnLive partnerships, are expected to continue without interruption and all customer purchases will remain intact; users are not expected to notice any change whatsoever. OnLive's current initiatives will continue as well, with major announcements of new products and services planned in the coming weeks and months.

OnLive said its board of directors decided to restructure the company under an "assignment for the benefit of creditors," an alternative to bankruptcy that expedites the closure of the troubled company. The company's assets, including its technology and intellectual property, were transferred to the new company in what it called "a heartbreaking transition for everyone involved."

However, under this type of transaction, no shares or employees are allowed transfer. As a result, the Palo Alto, Calif.-based said it was necessary to dismiss its entire staff but that it is in the process of rehiring many of them.

"Almost half of OnLive's staff were given employment offers by the new company at their current salaries immediately upon the transfer, and the non-hired staff will be given offers to do consulting in return for options in the new company," the company said in a statement. "Upon closing additional funding, the company plans to hire more staff, both former OnLive employees as well as new employees."

OnLive did not reveal who the new owners of the company were but did say the first investor was an affiliate of Lauder Partners, an early investor in the company in 2009. The company, which emerged in 2009 and launched the next year promising console-like speeds over broadband, was led by serial tech entrepreneur Steve Perlman.

Now playing: Watch this: Game not over yet for OnLive