News

Amid Controversy, 38 Studios Declares Bankruptcy - UPDATED

| 7 Jun 2012 20:45
image

State and federal authorities are now investigating the final collapse of the Kingdoms of Amalur studio.

Like the high-speed train wreck it so closely resembles, the grinding collapse of Curt Schilling's 38 Studios is hard to stop and getting uglier with every passing second. Today, the studio officially declared bankruptcy, and not the Chapter 11 kind, which allows companies to continue functioning while they get their finances sorted, but Chapter Seven, otherwise known as a one-way trip to Liquidation City.

"This action comes after several weeks when the company has reviewed, considered and received the recommendations and advice with respect to potential avenues for relief that are currently available," a company rep told the Providence Journal. "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."

Unfortunately for all involved, the end of 38 Studios doesn't mean the end of the unpleasantness. The Rhode Island State Police, the FBI, the U.S. Attorney's office and the Rhode Island Attorney General "are working together to investigate activities that have recently come to light at 38 Studios," according to State Police Colonel Steven O'Donnell. Those "activities" relate to the $75 million loan guarantee that brought 38 Studios to Rhode Island in the first place, plus another $8.5 million loan from Bank RI that was only recently disclosed, based on state film tax credits that had not actually been issued to the company.

And in case that's not bad enough, the Journal also reported that according to court documents, 38 Studios' Baltimore location, formerly known as Big Huge Games, has liabilities in excess of $100 million and assets of only $500,000 to $1 million.

Rhode Island Governor Lincoln Chafee has scheduled a press conference for later this afternoon. We'll update with further information as it becomes available.

UPDATE: Conflicting reports about the actual state of 38 Studios' debt have surfaced, as WPRI has chimed in with a different, albeit still very ugly, set of numbers. According to that report, 38 Studios Baltimore LLC owes only $5.5 million, while the company's total debt is just over $150 million. $115.9 million of that is a secured debt owed to the Rhode Island Economic Development Corporation, while the balance, including unpaid wages to former employees, is unsecured and not expected to be paid. Whatever the specifics eventually turn out to be, it's a lot of money, and a lot of people are going to lose out.

O'Donnell also clarified that the investigation into 38 Studios actually began on Wednesday, and is not connected to today's declaration of bankruptcy.

Source: Providence Journal, WPRI

RELATED CONTENT
Comments on