It’s the end of the line for 38 Studios, as the Providence, Rhode Island based video game company founded by Curt Schilling filed for bankruptcy protection.
This leaves the state of Rhode Island as the proud owners of an unfinished video game, 300 laid off workers and responsibility for repayment of the company’s $75 million loan plus interest and fees.
Not to mention the wholesale loss of RI EDC executives and board members who were shown the door after the 38 Studios mess landed on RI Gov. Lincoln Chafee’s door.
Background on the whole story here, here and here. In short, Rhode Island gave 38 Studios a $75 million loan guarantee as an incentive to lure them into moving to Providence from Massachusetts. The company took up the offer in 2010, spent almost $50 million and has now laid off all its workers and filed for bankruptcy. But the story is far from over.
After 38 Studios filed for bankruptcy, the Rhode Island State Police, the Rhode Island Attorney General, the U.S. Attorney in Rhode Island and the FBI are all now investigating the company’s operations. The Rhode Island State Department of Labor and Training is investigating 38 Studios because they stopped paying workers three weeks before laying them off en-masse.
38 Studios took out another last minute $8.5 million loan using state film tax credits it had applied for as collateral. The state never approved the tax credits and Gov. Chafee had publicly said last month that the state was not interested in providing any more financial help to 38 Studios.
Gov. Chafee talked about the bankruptcy at a news conference, where he said that, “the taxpayers of Rhode Island can have full confidence that if there’s a penny we can get, or a nickel or a dime, we’ll get it.”
According to the bankruptcy filing, 38 Studios now owes the RI EDC $115.9 million.
Bankruptcy statement issued by 38 Studios – “After ongoing negotiations with the State of Rhode Island and potential investors and other interested parties, the Company has been unable to find a solution to the current stalemate.”