- 38 Studios, founded in Massachusetts by ex-pitching ace Curt Schilling, files Chapter 7
- The videogame company owes creditors up to $500M, has assets of no more than $50M
- 38 Studios relocated to Rhode Island in 2010 after getting $75 million in loan guarantees
- State and federal authorities, including FBI, are probing the company's transactions
A Rhode Island-based video game company founded by former Major League Baseball pitcher Curt Schilling filed for bankruptcy on Thursday, according to court documents.
The company, 38 Studios, filed for Chapter 7 bankruptcy in U.S. Bankruptcy Court for the District of Delaware on Thursday. According to the filing, the company owes its creditors $150.7 million but only holds $21.7 million in assets.
"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," the company said in a statement Thursday. "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."
The move comes less than two weeks after the company laid off its entire staff of nearly 400 employees without pay.
Schilling founded 38 Studios after a 20-season career in the majors that ended in 2007. He pitched on three World Series championship teams and was once a co-MVP in the series. (He wore number 38 when he played for the Boston Red Sox).
In 2010, the Rhode Island Economic Development Corporation was able to persuade 38 Studios to relocate from Massachusetts with $75 million in loan guarantees. At the time, the company had not shipped a single product and was working on an expensive project, a "massive-multiplayer online role playing game," or MMORPG.
The company was tasked with bringing jobs to Rhode Island's tech sector, but the February release of its first game, "Kingdom of Amalur: Reckoning," was not enough to keep the company in the black. Rhode Island has the second-highest unemployment rate in the country, at 11.2%.
Rhode Island Gov. Lincoln Chafee said in a press conference that he had no prior knowledge of the filing, but that he was not completely surprised. Chafee told the media his office had been working with 38 Studios to find potential investors, and that it will now do its best to help the taxpayers.
"We're going to do everything possible to maximize return of our investment, and the taxpayers of Rhode Island can have full confidence that if there's a penny that we can get, or a nickel or a dime, we'll get it."
The FBI, the U.S. Attorney's office of the District of Rhode Island, the state attorney's office and the Rhode Island State Police have opened an investigation into the circumstances of all financial transactions at 38 Studios, according to Col. Steven G. O'Donnell, superintendent of the Rhode Island State Police.
O'Donnell would not comment on whether the investigation is related solely to the bankruptcy filing.