Spellbound Entertainment, the German developer behind ArcaniA: Gothic 4 (not earlier Gothic games) and the Desperados series, is filing for insolvency after an investment deal collapsed "in its final stages." It's optimistic about recovering, though.

Spellbound's appointed preliminary insolvency trustee Dr. Ulrich Nehrig has audited the developer and found, according to a press release, "that the company had well advanced projects that had generated positive feedback from video games publishers indicating that there is a strong possibility of recapitalization."

Spellbound's last big release was expansion pack ArcaniA - Fall of Setarrif, though it's been working on browser and mobile versions of its games too. Spellbound announced a steampunk action game named Ravensdale in April 2010, then scheduled for a 2012 release on PC, Xbox 360 and PlayStation 3, but little has been heard on it since.

Spellbound's 65 employees are still being paid in this first stage of insolvency proceedings, and business is continuing "as normal." Spellbound says that, according to Nehrig, "immediate investment proceedings will be initiated and his evaluation is that there is a very good chance of success."