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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.
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.
