Schilling’s 38 Studios Bounces $1.125 Million Check, Can’t Make Payroll
It won’t be long now: an article on WPRI today reports that 38 Studios, the developer behind this year’s Kingdoms of Amalur: Reckoning, tried to make good on its first loan repayment of $1.125 million to the State of Rhode Island at around 5 p.m. EST today.
But the check bounced.
Not only that, but apparently studio’s employees haven’t been paid, and according to a post on Joystiq, the company’s temporary workers and contractors have been laid off amid the crisis.
As those who’ve been following this story may know, in 2010, the State of Rhode Island gave 38 Studios a loan of $75 million in return for relocating from Massachusetts. But their first payment was due on May 1, and the studio hasn’t been able to come up with the funds—and if the loan isn’t paid back, the state’s taxpayers are on the hook for $112.6 million.
The effects of the bad deal—which the state’s current governor, Lincoln Chaffee, publicly opposed before taking office—have even had effects on the Rhode Island Economic Development Company itself, the state organization that brokered the loan. The EDC’s executive director, Keith Stokes, turned in his resignation last night. The position is still unfilled as of this writing.
At this point, it’s pretty much assured that 38 Studios will be filing for bankruptcy sooner or later. It seems unlikely that the state will offer any tax credits or extend the loan at this point—though I’m sure it’s possible. But even if they do, filing for bankruptcy, while never desirable, is a way for companies to work with debtors to restructure. However, no matter what happens, unless someone swoops in with a bunch of cash to clean up this mess, Rhode Island’s going to wind up paying for this over the next few years.