Rhode Island Sues 38 Studios for $75 Million Loan

November 1, 2012 -

You can't get blood from a stone, but the state of Rhode Island is going to try anyway. The state announced today that it has filed a lawsuit against Curt Schilling and various executives at the now bankrupt 38 Studios in an attempt to recoup the $75 million loan guarantee given to the studio to set up shop in Providence and create an MMO.

The 96-page complaint against 38 Studios and its advisors alleges fraud, negligence and civil conspiracy over the state-backed funding of 38 Studios' relocation to Rhode Island. 38 Studios shut down in May after failing to make loan payments and employee payroll. Earlier this month the company's physical assets were sold off in two separate auctions. The company's IP is expected to be sold off at some point too but the sale of these assets will not be enough to pay down the $75 in debt the company owed to the state.

"When it became clear that the company would not survive, I publicly stated my commitment to you that my primary goal would be to do everything within my power to protect the taxpayers of Rhode Island," Gov. Chafee said in a prepared statement. "I will work to minimize any loss of your hard earned taxpayer dollars."

Chafee, who seems to have a lower approval rating than 38 Studios does in Rhode Island right now, says the state of Rhode Island enlisted the help of attorney Max Wistow to investigate the state's position and 38 Studios' financial situation.

"The complaint on its own contains a great deal of important and illuminating information on how this deal unfolded," Chafee said in his statement.

"Litigation is often long and tedious," Chafee added. "The filing of this complaint is only the beginning."

You can read the entire complaint here (PDF), catch Chafee's statement here, or watch it to your left. Better yet, you can read Polygon's in-depth report on this latest wrinkle in the 38 Studios fight here.

Source: Polygon


Comments

Re: Rhode Island Sues 38 Studios for $75 Million Loan

I am not sure if this lawsuit is the right reaction to 38's failure, but I knew from the first time I heard the proposal that it was a bad idea. You could tell that those on the government side handling the deal knew nothing about the games industry and specifically about the volatility of MMO games. Had someone with any real knowledge of the industry and the risk that comes with creating a successful MMO been in on the discussion, this never would have happened.

That said, 38 Studios still holds some responsibility as they should have been more open with sharing those risks with the RI government.

Re: Rhode Island Sues 38 Studios for $75 Million Loan

Won't... won't that just cost MORE money (lawyers and such?)

Re: Rhode Island Sues 38 Studios for $75 Million Loan

Maybe I'm a little too simple-minded for this particular matter, but, since 38 Studios filed for bankruptcy (legally stating they are incapable of paying back their debtors), and the State of Rhode Island was their largest debtor, wouldn't suing them for the money they've declared on their bankruptcy filing be counter-intuitive?

EDIT: After reading the story on Polygon, it would appear that the state should be suing Wells Fargo instead of 38 Studios, since they claim it was the false info given by Wells Fargo that made the loan go through in the first place.

--- With the first link, the chain is forged.

Re: Rhode Island Sues 38 Studios for $75 Million Loan

Yeah, Wells Fargo, Barclays and a bunch of other companies and individuals are the defendants of this suit. RI is going after everyone they can.

 
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