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Rhode Island attempting to default on 38 Studios' debt
The AP is reporting that Rhode Island is attempting to default on the debt it owes for 38 Studios' $75 million loan and subsequent bankruptcy. The state has a proposal before lawmakers that would keep it from having to make any payments to bond holders. Supporters of the move to default say that the insurance company will compensate bond holders, while the EDC, which approved the loan, says that defaulting will hurt future project and bond ratings. One lawmaker and default proponent, Rep. Charlene Lima, said that the 38 Studios fiasco harmed the reputation of the state and constricted its future economic development. The proposal is being opposed by Governor Lincoln Chafee, who wants to see the debt repaid.
38 Studios may have 'actively masked' its financial hardship
Just when you thought the world might let the wound where 38 Studios and Kingdoms of Amalur were ripped from your heart heal over, along comes some new drama. Max Wistow, the lawyer for the Rhode Island Economic Development Corporation, filed documents on behalf of the state claiming that 38 Studios needed more than $75 million in loan guarantees before the company ever moved to Rhode Island. He argues that folks at 38 Studios knew that the funds they were receiving from the state would be insufficient. The company netted about $50 million from an EDC bond sale, and Wistow is claiming "crushing evidence" that 38 Studios actively masked its financial shortfall.
Schilling asks judge to throw out lawsuit over $75 million loan
Curt Schilling, founder of defunct 38 Studios, asked a judge to throw out The Rhode Island Economic Development Corporation's lawsuit that alleges Schilling and studio executives misled the agency in securing a $75 million taxpayer-guaranteed loan. The lawsuit accuses Schilling and his crew of fraud, racketeering and conspiracy.Schilling's lawyers filed documents on Friday to Superior Court Judge Michael Silverstein, asking him to throw out the lawsuit. The documents claim Schilling and other board members repeatedly disclosed 38 Studios' financial situation to the EDC, and that the EDC knew $75 million wouldn't be enough to finish its MMO, Project Copernicus."Given the EDC's admissions concerning 38 Studios' disclosures to the EDC's executives, attorneys and financial advisor, it is impossible for the EDC simultaneously to claim that the 38 Studios defendants supposedly defrauded the EDC," the filing reads.
Rhode Island EDC sues Curt Schilling and more over 38 Studios loan
Back in May, Project Copernicus developer 38 Studios became embroiled in the controversy of the year when the studio officially shut down and fired all 379 of its employees. The story quickly turned political as the studio had been granted a loan of $75m US by the state of Rhode Island and it became known that the tax-paying public could be hit for an estimated $150.7m US due to the studio's closure. The story of mishandled taxpayer money has played a big part in the politics of Rhode Island. Today that story developed further as the Rhode Island Economic Development Corporation (EDC), which granted the original loan and may therefore be responsible for the public debt, filed a lawsuit against the people who created the deal. The defendants named in the case include 38 Studios founder Curt Schilling, CEO Jennifer McLean, former EDC executive director Keith Stokes, Wells Fargo Securities and even Barclays Capital. Rhode Island Governor Lincoln Chafee released a public statement about the lawsuit on YouTube.
38 Studios loan could impact state elections
If you've started to forget about the saga of 38 Studios' collapse, rest assured that Rhode Island politicians certainly have not. With the election coming soon, many in the state are scrambling to offset the blame for the $75 million loan decision and protect their positions. The Associated Press is reporting that it's being seen as a "liability" among candidates. One candidate, Mark Binder, addressed the continued furor over the issue: "If I don't bring it up, other people bring it up. Everyone is infuriated. There's this game going on in Rhode Island right now called 'pass the blame on 38 Studios.'" While many of those directly responsible for voting the deal through have since resigned from their positions, the search to pin the fiasco on one of the state's leaders is still underway. Another 2012 candidate, Laura Pisaturo, said that the public is demanding more answers: "People read in the paper about 38 Studios and think 'we elect these people and expect they will lead and ask tough questions.'"
