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38 Studios knew $75M loan wasn't enough to finish Project Copernicus
Emails surfacing from the legal fracas concerning 38 Studios and its loan from Rhode Island indicate that the studio knew the loan was not nearly enough to fully fund the game but decided to hide that from outsiders. 38 Studios Vice Chairman Thomas Zaccagnino allegedly sent one the damning emails, urging a few studio execs to remain mum on the financial situation: "I really do not think we should highlight the fact that we might be under-capitalized... [it] won't go over well with the staff or board." The email was in response to CEO Jen MacLean, who wrote that she was concerned that the state wasn't delivering the full $75 million from the agreement and that the project would fall short of funding because of this. One lawyer involved in both the deal and the lawsuit said that the state knew that the deal wasn't enough to fully fund: "The [EDC] Board was acutely aware that the capital needs of 38 Studios where [sic] in excess of $125MM as acknowledged in the 2010 EDC Inducement Resolution[.] The Board also knew that the net proceeds of the EDC Loan would be less than $75MM."
Rhode Island Governor signs 38 Studios settlement bill
Following successful votes in the Rhode Island Senate and House of Representatives, a bill designed to help settle the 38 Studios fiasco was signed into law by Governor Lincoln Chafee yesterday. Lawmakers hope that the bill will encourage settlements by shielding defendants from further litigation. Involved parties say that this bill will pave the way to recover as much as possible of the $90 million that Rhode Island is responsible for paying following the defaulted loan to 38 Studios.
Rhode Island senate passes 38 Studios legislation
A major hurdle in paving over the bad feelings, poor decisions, and millions of dollars in unpaid loans that 38 Studios caused when it defaulted two years ago has been crossed, as Rhode Island's Senate has approved legislation to settle the affair out of court. The Senate unanimously passed a bill to shield from future lawsuits any party that settles with Rhode Island Commerce Corp. The RICC, formerly the Economic Development Corp., has been trying to figure out a way to recoup as much of the $90 million lost through former 38 Studios deals as possible, and the attorney for the state says that this legislation will increase any future recovery of those funds. The Rhode Island House of Representatives has to consider and vote on a similar bill for this to proceed. Lawyers say that the longer this case goes without a settlement, the larger the legal bills will be, which will diminish those funds the state does recover.
Legislation may pave a path for 38 Studios case settlement
Amazingly enough, the 38 Studios saga could be wrapped up soon if lawyers and the Rhode Island government agree on a path out of the legal swamp. The Associated Press is reporting that efforts are being made to settle the 38 Studios lawsuit out of the courts. Rhode Island's lawyer is encouraging the state senate to pass legislation allowing both sides to come to a settlement, as the remaining 38 Studios assets and resources are "being eaten up very rapidly." The state is suing Curt Schilling and 13 others over the $75 million loan that 38 Studios defaulted on back in 2012, looking for repayment plus additional compensation for damages. If the legislation passes and a settlement is reached, then the defendants would be protected from any further claims for compensation.
Legislation introduced to resolve 38 Studios lawsuit
The ongoing saga of 38 Studios and the state of Rhode Island continued on Wednesday courtesy of Governor Lincoln Chafee introducing a new piece of legislation to the state assembly. Specifically targeting the ongoing lawsuit, the legislation would be used as an inducement for the former company to settle with the state out of court rather than go through the lengthy process of a trial by ensuring that the named defendants will not face further litigation on the same causes. In more conversational terms, the bill states that if the defendants in the lawsuit settle out of court, they cannot be sued again in Rhode Island courts by other people over the closure of the company or other similar charges. Whether or not this will provide sufficient incentive for Curt Schilling and the other 13 defendants named in the lawsuit to simply settle remains to be seen.
Rhode Island governor calls Project Copernicus 'a lot of junk'
Were you surprised that Project Copernicus didn't manage to sell at auction? Rhode Island governor Lincoln Chafee wasn't. In recent statements to the associated press, Chafee stated that the property was "a lot of junk" and decried every step of the loan process for 38 Studios. In the governor's own words: "People just panicked and gave a retired baseball player a huge amount of taxpayer money with no experience in this industry or any other businesses." Curt Schilling (the second key player in this ongoing drama, with the other being the state of Rhode Island) responded to the governor's statements on Twitter, claiming that a failure is obvious in hindsight. He also cited Chafee's current job approval numbers, suggesting that the state as a whole would like the opportunity to re-do its gubernatorial election. Richard Land, the man in charge of auctioning Project Copernicus and other 38 Studios assets, is allegedly still looking for private buyers for the IP.
38 Studios loan under SEC investigation
It seems as though we can't go more than a few weeks without hearing about some new complication related to the collapse of 38 Studios and the financial catastrophe it left in its wake. This week's news comes in the form of an SEC probe into the $75 million in loan guarantees offered to the studio by the Rhode Island Economic Development Corporation. The RIEDC has secured the services of a law firm to help it handle the SEC's investigation. Further details are sparse, as the RIEDC has offered only that it "doesn't discuss ongoing matters related to 38 Studios and maintains a level of confidentiality as requested by the SEC." Strangely, the SEC investigation, which launched in early 2012, was not mentioned to investors when Rhode Island published financial documents related to a bond transaction in April of that year. According to the treasurer's spokesperson, the state's treasury was not aware of the probe at that time. The RIEDC is currently involved in a lawsuit against studio head Curt Schilling and former RIEDC members responsible for the 38 Studios deal.
Lawsuit against Curt Schilling and 38 Studios allowed to proceed
According to a report in the Boston Globe, a Rhode Island judge has ruled that the state's lawsuit against baseball star Curt Schilling and his merry band of 38 Studios execs will continue, in spite of the defense's movement to dismiss the case outright. The suit, which began in May, was filed by Rhode Island's economic development agency, which alleges that 38 Studios' representatives knew the studio was financially unsound and effectively defrauded the state when it accepted its $75 million state loan three years ago. The studio was working on MMO Project Copernicus before it imploded and defaulted on that loan. Schilling has rejected those accusations and previously called Governor Lincoln Chafee a "dunce of epic proportions" in a daring bout of real-world smacktalk. So what's in it for Rhode Island? Aside from saving face, nothing much, just the reclamation of a cool $75 million in bonds it doesn't want to absorb plus triple in damages from Schilling and other executives. But let's not get ahead of ourselves, Rhode Island; the judge did rule that RI can't sue for the whole package just yet.
Curt Schilling discusses life after 38 Studios
There's not a lot of love in the gaming world for Curt Schilling. The closure of 38 Studios that left the state of Rhode Island with a $75 million debt and hundreds of people out of jobs has colored perceptions. A recent piece from the Boston Globe takes a look at Schilling with a slightly gentler approach, discussing the heart attack he suffered eight months prior to the studio's closure and the stress he's felt over the failure. Schilling once again puts the blame for what happened at the feet of Governor Lincoln Chafee, who he claims failed to help 38 Studios when assistance was required. The article goes into more depth discussing the many assets from Schilling's baseball career that were auctioned off to pay damages, as well as his retirement from public life in favor of coaching his daughter's softball team. Those still interested in the fallout can take a look at the full article for more perspectives from both Schilling and his wife.
Yep, it's more 38 Studios drama
Ah, 38 Studios. What would we do without the dried husk of your long-dead corpse to kick around the sanctified halls of American journalism, both actual and gaming? The latest drama from Curt Schilling's former studio comes courtesy of the New York Times, which reports on Rhode Island governor Lincoln Chaffee's latest attempt to distance himself from the fiasco surrounding 38's inability to pay back state loans. "I had so many reservations about this being a bad deal, that I was reluctant to micromanage, to have it be 'Chafee screwing this up,'" he told the Times. "And don't forget, we had our hands full in this state."
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.
38 Studios' Amalur MMO 'Project Copernicus' would have been free-to-play
Details continue to surface regarding "Project Copernicus," the Kingdoms of Amalur MMO that once dominated development at Curt Schilling's now-defunct 38 Studios. We've seen an early trailer of the game and learned that it wasn't any fun to play, but Copernicus' more tangible bullet points, such as its pricing structure, have remained a mystery."We were going to be the first triple-A, hundred-million-dollar-plus, free-to-play, micro-transaction-based MMO," Schilling told Boston Magazine. "That was one of our big secrets."Schilling went on to say that Copernicus' status as a free-to-play MMO would have been the "atom bomb" that "shocked the world," once the game eventually debuted. Copernicus' non-subscription architecture was also one of 38 Studios' strongest selling points during late-stage negotiations with potential investors, according to Schilling, and that talks could have been kept alive were it not for Rhode Island Governor Lincoln Chafee's disparaging public tone.
38 Studios liquidation valued in tens of millions by RI, gov. will get every penny he can for taxpayers
38 Studios declared bankruptcy earlier this afternoon and Rhode Island Governor Lincoln Chafee held a press conference this afternoon to discuss the company's assets, which now belong in part to Rhode Island taxpayers. "We have had in recent days discussions with investors that were and, to my knowledge, are discussing substational numbers, which indicate that there could be significant value to the assets," said Jonathan Savage, council to the Rhode Island Economic Development Corporation. "I can say that discussions we've had have been in the tens of millions of dollars." "We are going to do everything possible to maximize return on our investment," declared Governor Chafee. "Taxpayers in Rhode Island can have full confidence that if there's a penny that we can get, or a nickle or a dime, we'll get it." Earlier this year, Wedbush Securities analyst Michael Pachter told us that he expected 38 Studios' IP to be worth approximately $20 million.
38 Studios declares bankruptcy, formal investigation begins regarding finances
Curt Schilling's embattled 38 Studios declared Chapter 7 bankruptcy (liquidation), as Rhode Island and federal authorities open an investigation into how the company handled its finances.WPRI reports the state police, attorney general's office, US Attorney's office and the FBI will investigate 38 Studios, "both the money that came from the state as well as the money that came from Bank Rhode Island." The Providence Journal confirmed the bankruptcy this afternoon.Beyond the controversial taxpayer backed loan of $75 million to 38 Studios, the Bank Rhode Island reportedly loaned the developer $8.5 million earlier this year against tax credits that haven't materialized.
Former 38 Studios employees defend Schilling, talk political misinformation [Updated]
Gamers and other outsiders have been quick to label Curt Schilling as the primary villain in the 38 Studios drama, but a new piece at Gamasutra intimates that that might not be the whole story. The website cites multiple anonymous sources who say that 38's situation wasn't helped by Rhode Island governor Lincoln Chafee. "Once things went bad, Chafee's office started leaking any information it could to make 38 Studios look like it had been a bad deal. Unfortunately, a lot of these leaks involved partial and complete misinformation," the source said. Another source dispelled notions of excessive spending at the shuttered studio. "I can say that the company didn't spend money extravagantly at all. We didn't have giant statues in the halls, or supercomputers with 30-inch monitors at every desk. We had what we needed to work on the game and that was it," the source tells Gamasutra. [Update: One former team member talked about 38 Studios' MMO, saying that it was quite close to completion: "I have worked on a number of projects in my career, and I can say without reservation that Copernicus [had] incredible potential to be a blockbuster MMO. It wasn't completely revolutionary in terms of gameplay, but it took existing conventions and refined or improved them across the board. The idea that this imminently playable, triple-A, beautiful MMO that had millions of dollars and man-hours poured into it is heartbreaking."]
Schilling says he could lose $50 million of his own money in 38 Studios implosion [update: Chafee responds]
Embattled 38 Studios co-founder and head Curt Schilling finally broke his weeks of silence on the Rhode Island studio's recent implosion in an interview with The Providence Journal. "Frustration" seems not strong enough a word to describe his feelings toward Rhode Island Governor Lincoln Chafee – Schilling called Chafee's commentary surrounding 38 Studios "devastating," and claimed it "scared off private investors."Schilling also said that he could lose $50 million due to the studio's failure – money which he earned as a professional baseball player, and which he later invested into 38 Studios. That money, as well as approximately $50 million of a planned $75 million loan co-signed by the state of Rhode Island, was eaten by 38's long-in-development MMO, "Project Copernicus."38 Studios' Baltimore-based subsidiary, Big Huge Games, was working on a sequel to this year's Kingdoms of Amalur: Reckoning. The project was depending on private investment to go into production – to the tune of $35 million from an unnamed publisher – which Schilling said was pushed away by Chafee's statements."Curt was committed to us as a community and as people, he wanted the best possible work environment for the team he cared so much for, and as a result none of us wanted to let him down," one former 38 Studios employee, speaking under condition of anonymity, told us. "He had invested so much into us financially and personally, we were not about to betray that trust. We were not going to take the chance of speaking to the press and accidentally ruining any chances with outside investors. Unfortunately, it didn't matter if the employees spoke and ruined things with the investors as the Governor beat us to it."Last week, 38 Studios laid off its near-300 person staff in Rhode Island, as well as its approximately 100-person studio in Baltimore, Big Huge Games.Update: Governor Lincoln Chafee responded this morning to Schilling's comments in a short Q&A session with Rhode Island reporters. "As a business person, he was new at it, and so I always had some reservations," Chafee said. "I have to verify everything, I can't just take it as a leap of faith," he told one reporter asking about the alleged $35 million that 38 Studios was on the brink of acquiring to create a sequel to this year's Kingdoms of Amalur: Reckoning. "Hope springs eternal, but I won't misrepresent to the Rhode Islanders how dire the situation is," Chafee added. "I understand that being involved in this very risky industry that, when things aren't going well, there's gonna be blame. But this isn't accurate to be blaming the state in this case."
Rhode Island: Fired 38 Studios staff are highly skilled, will find new work
Rhode Island Department of Labor and Training director Charles Fogarty said today that the staff of 38 Studios, all of whom were laid off yesterday, will be able to find new jobs because they are "highly skilled.""The individuals in question, most of them are pretty highly skilled," Fogarty said. "They've already been contacted by a number of employers. Our department has been contacted by folks looking for people with that type of skill."Governor Lincoln Chafee and his team today held another press conference to address 38 Studios' financial situation, leading with the information that his office wasn't informed of the layoffs yesterday. Chafee held a press conference one hour after news of the firings broke yesterday; about 300 people in Rhode Island and almost 100 from Big Huge Games in Maryland lost their jobs.Today, Fogarty said he didn't think it would be difficult for these former employees to find new work."I don't expect that they're going to be unemployed for all that length of time," he said. "So far there's only been a small number who've actually applied for unemployment benefits at this point."Fogarty didn't say how many former 38 Studios employees had applied for unemployment. To allay concerns of the wider economic impact of supporting an influx of people on unemployment, Fogarty said the following: "Don't forget, a number of them are not Rhode Islanders. They worked here but they were not Rhode Islanders."Of the unspecific number of people who filed for unemployment, about half were Rhode Islander residents, he said, responding to questions about the "jobs for Rhode Islanders" pitch that came with 38 Studios' founding.Gov. Chafee doesn't think it's futile to attempt to find investors in 38 Studios, saying that when a studio is basically defunct and has no employees, "some might argue that that's the time for an investor to come in, when you can get it for pennies on the dollar, but we're still fairly pessimistic."Unfortunately, even if an investor did jump in, Rhode Island would be the "pennies" part of that analogy, not the dollar.
Kingdoms of Amalur: Reckoning had to sell 3M 'just to break even,' RI governor says
Despite Kingdoms of Amalur: Reckoning selling "1.22 million copies in its first 90 days" according to 38 Studios head Curt Schilling, it apparently never crested the 3 million mark it needed to break even. "The game failed, the game failed," Rhode Island Governor Lincoln Chafee told attendees of a press conference this afternoon.According to "experts" speaking with Chafee's office, Reckoning needed to sell over 3 million copies "just to break even," never mind profit. The action RPG was released this past February to critical praise and modest initial financial success. It was credited with saving Big Huge Games from destruction back in 2009 when 38 Studios picked up the Baltimore studio, primarily for repurposing an already-in-production RPG into what we now know was Kingdoms of Amalur: Reckoning.Both 38 Studios and Big Huge Games laid off their staffs this afternoon amidst major financial trouble at 38.
38 Studios and Big Huge Games lay off entire staffs [update]
38 Studios and Big Huge Games have both let go of their entire staffs, a source with knowledge of the situation tells Joystiq. Following reports that 38 Studios stopped paying staff on May 1, and just an hour before a scheduled press conference in Rhode Island addressing the recent 38 Studios financial debacle, both the Providence, RI-based 38 Studios and the Baltimore, MD-based Big Huge Games are no more."Big Huge Games was home for my wife and me for our adult lives so far. I'll miss it terribly, but so proud. Good night and good luck," former Big Huge Games lead world designer Colin Campbell said on his Twitter account. Big Huge's latest release was the moderately successful Kingdoms of Amalur: Reckoning. The studio was picked up by 38 Studios back in 2009, and it crafted the first entry in 38's ambitious new universe: Amalur.The recent financial tumult arose following a defaulted payment from 38 Studios to the Rhode Island state government on May 1, indicating much larger financial issues that could ultimately lead to Rhode Island taxpayers owing up to $112.6 million between 2013 and 2020. It's unclear whether today's layoffs mean 38 Studios is unable to pay back the approximately $50 million its owes Rhode Island of a planed $75 million loan. If that's the case, Rhode Island will take over ownership of the Amalur IP, valued at around $20 million.We expect to hear more at a scheduled press conference this evening held by Rhode Island Governor Lincoln Chafee.Update: WPRI got ahold of the internal memo to employees at 38 Studios, which reads: "The Company is experiencing an economic downturn. To avoid further losses and possibility of retrenchment, the Company has decided that a companywide lay off is absolutely necessary. These layoffs are non-voluntary and non-disciplinary. This is your official notice of lay off, effective today, Thursday, May 24th, 2012." Big Huge Games and 38 Studios collectively employed 379 full-timers as of March 15, according to the report.
