38 Studios Filing For Bankruptcy, Authorities Begin Investigation
Curt Schilling's beleaguered video game company has filed for chapter 7 bankruptcy. According to documents related to the filing, the company owes $100 million in Baltimore alone.
Given that the 38 Studios' Baltimore LLC branch of the company is only one of four 38 Studios affiliate companies (the others being 38 Studios LLC, Mercury Project LLC, and Precision Jobs LLC), the actual amount of debt owed by 38 Studios is likely much higher than $100 million. With the filing, it's now likely that the State of Rhode Island will be responsible for the $75 million dollar loan to 38 Studios that it backed as part of a job creation initiative.
According to reports, the filing listed 45 pages worth of creditors.
As part the bankruptcy filing, all 38 Studios assets will be liquidated. Unfortunately, the value of the company's outstanding assets only total between $500,000 and $1 million.
This is bad news for Schilling, but things might get worse. According to Col. Steven G. O'Donnell of the Rhode Island State Police, "[We] are working together to investigate activities that have recently come to light at 38 Studios." We assume this is an investigation into fraud or other illegal business practices. Recently, the Providence Journal reported that 38 Studios improperly secured bank loans secured by promised Rhode Island state film tax credits. It's also under question as to whether a video game developer was even eligible for the film tax credit.
Rhode Island governor Lincoln Chafee will hold a press conference today at 4 p.m. EST to address the news.
Source: Providence Journal