The Rhode Island Senate has approved legislation to encourage settlements of 38 Studios lawsuits, but some lawmakers are still trying to force the state to default on its debt.
Earlier this month, Rhode Island proposed a law that would protect defendants who settle lawsuits related to 38 Studios from separate lawsuits filed by other defendants who are found liable for damages. Simplistically, it encourages settlements – and thus a resolution of the whole ugly mess – by letting people pony up and get out, without fear of being pulled back in.
The fast-tracked bill received unanimous approval from the state Senate yesterday, a couple of days after a lawyer for the Rhode Island Commerce Corp., formerly the Rhode Island Economic Development Corp., told a House committee that many defendants in the case have “cannibalizing” insurance policies that will reduce the amount of money the state can recover as the legal bills increase. “Any settlement in this case is going to be a benefit to the taxpayers,” he said. The Rhode Island House is looking at similar legislation, but hasn’t yet scheduled a vote.
Meanwhile, a separate bill introduced yesterday by Democractic Rep. Karen MacBeth seeks to force the state to default on the debt by prohibiting the Commerce Corp. from making payments on it. A first payment of $2.5 million was approved last year but the next one is $12.5 million and some state legislators say taxpayers shouldn’t be forced to cover the state’s bad investments. Governor Lincoln Chafee, however, has stated that defaulting on the debt would damage the state’s reputation and drive up borrowing costs.
The Rhode Island EDC approved a $75 million loan guarantee to attract Curt Schilling’s 38 Studios to the state back in 2010, but found itself holding the bag when the studio went under less than two years later.