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RI Gov Forced 38 Studios' Bankruptcy, Former Official Says

| 4 Oct 2013 16:30
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The game company founded by retired Major League Baseball pitcher Curt Schilling was unable to restructure its debt because of the governor of Rhode Island, a former official said.

Former Red Sox pitcher Curt Schilling liked games so much that he decided to create a game company called Green Monster Games, later renamed 38 Studios for Schilling's jersey number. The company had financial troubles and was forced to declare bankruptcy. Keith Stokes, former director of Rhode Island's Economic Development Corp., alleged Governor Lincoln Chafee of forcing the bankruptcy by obstructing any attempts made to restructure the company's debt or raise additional money.

Christine Hunsinger, Chafee's spokeswoman had no immediate comment, The Boston Globe reports. When campaigning for governor, Chafee opposed the 2010 deal that loaned $75 million to 38 Studios and encouraged the company to relocate from Massachusetts to Rhode Island. At the time, Stokes and previous governor Don Carcieri said the deal would help the economically-struggling Rhode Island. 38 Studios declared bankruptcy last year after releasing only one game, Kingdoms of Amalur: Reckoning.

Stokes alleges Chafee refused to meet with the company to discuss financial issues and blocked debt restructuring in late 2011 and early 2012, leading to the company's declaration of bankruptcy in June 2012. However, the state is now responsible for $90 million concerning the 2010 deal. The state sued Stokes, Schilling, and other parties "asserting that they knew the company would run out of money by last year but concealed that from the board." Schilling filed a motion to dismiss the lawsuit in March, but a federal judge allowed the lawsuit to proceed in August.

Kingdoms of Amalur: Recokning received generally positive reviews, but was not a financial success. Chafee said the game needed to sell 3 million copies just to break even. The U.S. Securities and Exchange Commission is investigating the $75 million deal on claims that 38 Studios withheld information about its state of financial affairs.

Source: The Boston Globe

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