I don't buy that at all. If Paragon Studios looked bad to investors at the time of Nexon buying the shares, Carbine's balance sheet looked a hundred times worse. ArenaNet was probably in the red as well, as GW2 was in the late stages of development but not yet released.
Actually I buy it, I found some things out via the city of heroes forums and having applied for a position at the time, just before the shutdown was announced.
Paragon was actively hiring people, partly because some of the main designers were leaving, and the things the newbies were doing was for a lack of better words 'new', not continuing what had been done previously. That meant a lot of work was being done by a lot of new people and they were being paid for it, yet nothing much was going to come out of it any time soon or at previous rates.
that does look bad, but it was just an unplanned hiccup, not like paragon studios could foresee some designers quitting, and not like they could shove a newbie right into a project someone else was working on.
This is why I brought up the game company marketing thread a while back, and why I suggested Contingency as the pay-out model, that way new people can be hired and they work but don't get paid till their work actually makes money. that way it doesn't look bad from stock holders perspectives.
I mean to be honest SOME of the stock-holders were there for ulterior purposes and looking for any sign of weakness in the product to lash out at, basically CoX couldn't afford a hiccup. The enemies were Anti-game-violence groupies who bought mass stock shares via group donations (through a company supporter) in attempt to find someway to kill this 'weak-financially-backed Violent Superhero MMO'. and when they saw the hiccup they threatened to pull out due to a profit decline lots of other backers who were there for money did the same, with the note to kill the low profit MMOs as the only means to keep their business and the meeting being under an NDA so they don't look bad.
I had to do some research into anti-video-game-violence groups for an essay for my masters, turns out they are linked to liberal political groups and only pick on games that won't sacrifice from game quality to include liberal ideologies in context or concept. Seeing as Paragon was all about making a cool superhero MMO they would want no part of any ideological injections into CoX other than those (super-natural ones) they had planned for plot purposes, and therefore were perceived as a threat and targeted via the anti-video-game-violence groups.
it's a really ugly practice "if they wont join you, Destroy them" versus "if you can't beat them, join them"
Edit: Fact is, it's fine for a new MMO that is still in development to have deficits, but for a game 5+ years old that game should be holding it's own without hiccups. That's how investors saw it.
ncsoft and paragon could have covered their back-sides bit better using a contingency pay-out model