As we reported previously, the assets of Free Radical have been on the auction block since the company entered bankruptcy a few weeks back. The bankruptcy administration has been looking at the possible asset sale and today it was announced that Crytek had purchased all of Free Radical’s assets.

The biggest assets would have to be the TimeSplitters and HAZE franchises, which now will go to Crytek. With the announcement, Crytek was unclear on what the exact future of the studio might be, but the company does give the impression that the studio will re-open as a Crytek satellite studio, and many employees which have at least a chance to join Crytek.

The problem is that Crytek might not get some of the best talent that Free Radical had to offer; our sources tell us that key former members of Free Radical have formed a new studio called Pumpkin Beach while the situation with Free Radical has been in limbo. We can’t yet confirm which members from Free Radical are making up the new studio.

According to our sources at least 40 positions will be saved at Free Radical because of the Crytek acquisition, but 140 employees have already been laid off, so it is not yet clear who or how many of those will be among the 40 positions that Crytek wants to keep.

The purchase announcement by Crytek highlights the fact that the studio going forward will be using the CryENGINE technology to build new titles. The purchase will get Crytek a foothold in the U.K. and access to some of the U.K. development talent pool, which is exceptionally deep. The decision to acquire Free Radical gives Crytek the ability to develop new franchise titles based on TimeSplitters and HAZE using the CryENGINE technology, which may in fact be a good thing, as the company has long been seeking more development using their engine technology platform, according to our sources.