Acclaimed Flop: Somewhat true. The game received good reviews and sold over one million copies but was in development for so long and cost so much that it was said it needed to sell three million copies just to break even. This did not happen and lead to 38 Studios bankruptcy and closure.
Creator Killer: The only game 38 Studios ever released, it did not sell well enough to keep them from bankruptcy and closure.
Stillborn Franchise: 38 Studios had high hopes for the Amalur franchise, but the events surrounding its closure lead to the rights to the game being held by the State of Rhode Island. The State attempted to auction off the intellectual property rights but were unable to find a buyer for them, meaning we're likely never to see another installment.
Troubled Production: 38 Studios borrowed money left and right from the state of Rhode Island, ultimately racking up a 75 million dollar debt. They were apparently confident that they would be able to pay back all the loans with the game's sales, as well as the sales of the then-in planning MMO, but it then turned out that the game would have had to sell 3 million just to break even. Long story short, 38's financial situation imploded, they went bankrupt, and all their assets, including the Amalur IP, were seized by the State of Rhode Island.
The head of 38 was famous Boston Red Sox pitcher Curt Schilling, who traded heavily on his celebrity in convincing Rhode Island to suspend their own funding rules to loan his company more money. Not that RI necessarily needed convincing; to the state that, at the time (and possibly still today), had one of the five highest unemployment rate in America, the promise of a major high-tech firm bolstering their economy must have been very easy to get excited about. (RI's long rivalry with Massachusetts may also have played a role: here was one of Boston's star sons offering to bring his business to Providence instead.)
The New York Times did a long story about this. In addition to the above points, there's the fact that RI governor Lincoln Chafee had not endeared himself to Schilling when, as a candidate while the state was doing the deal, he dared to repeat insinuations that the Schilling had put red paint on his sock himself rather than actually bleeding during the most famous game of his career. While he tried to make up after he was elected, Schilling still resents that.
Schilling was probably out of his depth with his ambitious plans for the game. A complex multilevel PVE game is challenging to develop even for an established game maker with a success of exactly that type. He hired R.A. Salvatore to create a 10,000-year backstory for the game, for which Salvatore has yet to get paid any of the $2 million he's owed. One of 38's original executives said he had tried to convince Schilling to develop and release the game in stages, rather than "trying to build a skyscraper on the side and then stand it up."
Schilling paid very generous salaries ... by his estimate, the average pay at 38 was $86,000. The company went so far as to pick up the mortgage payments on its employees' unsold Boston-area homes if they moved closer to Providence. And since the state had made the investment to create jobs, 38 ultimately hired 400 people—a lot for a new game developer with only one title out.
In the end, everybody got hurt. Over three hundred people were let go from the jobs Rhode Island wanted so badly. Schilling claims to have lost his entire fortune from his baseball career, and had to auction the bloody sock. Chafee decided not to seek a second term. The state is suing Schilling, claiming he knew the game was unlikely to succeed (not hard to have seen that coming, since he couldn't get financing in Boston, where there are tons of venture capitalists focused on tech companies) and was attempting to defraud the state.
What Could Have Been: This game was meant to be an introduction to the world of Amalur and would eventually lead to a free-to-play massively multiplayer online role-playing game codenamed Project Copernicus. The mismanagement and ensuing bankruptcy of 38 Studios killed any chance of that happening.