Canadian esports organization Team Reciprocity is facing potential insolvency as global markets crash in response to the COVID-19 pandemic. In a somber video posted on Twitter, Team Reciprocity President and Founder Chad Larsson announced that the company would be laying off most of its staff and esports teams and scaling things down to the “bare bones.”

In February this year, Team Reciprocity entered into a letter of intent to perform a reverse takeover (RTO) with Rainy Hollow Ventures, a company listed on the TSX Venture Exchange (TSXV). The esports company hoped to obtain interim funding in the meantime. However, that financing was withdrawn as a result of the pandemic’s effect on global markets.

“This financing has since dissolved given the astronomical crash on the global capital markets,” Larsson said in his video. “This has positioned Reciprocity to scale down to its bare bones to survive long term the current market conditions.”

While Larsson said the company will continue working to raise funds and complete its RTO, it will have to lay off most of its teams and staff in the meantime. The company owned around a half dozen teams, including a Rainbow 6 team that was considered one of North America’s best. Reciprocity also owned Rocket League, PUBG, Gears of War, and Street Fighter teams.

For now, the company will maintain its partnership with LGD Gaming to keep its CrossFire team playing. It will also retain its Latin America-based League of Legends team in partnership with Mexican company Rainbow7.

Team Reciprocity is not the only esports organization to announce layoffs since the coronavirus crisis began. OverActive Media, owner of the Toronto Defiant and Toronto Ultra esports teams, announced layoffs earlier this week. While the company did not state that the layoffs were coronavirus-related, OverActive deemed the layoffs to be necessary “to continue to thrive in these challenging times.”

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