Schilling’s co. files for bankruptcy; feds probing
by Erika Niedowski, Associated Press and Laura Crimaldi, Associated Press
June 07, 2012 03:23 PM | 290 views | 0 0 comments | 3 3 recommendations | email to a friend | print
Curt Shilling
In a Monday, May 21, 2012 file photo, former Boston Red Sox pitcher Curt Schilling, center, is followed by members of the media as he departs the Rhode Island Economic Development Corporation headquarters in Providence, R.I. Schilling and Rhode Island's economic development agency met Monday to discuss the finances of his troubled video company. (AP Photo/Steven Senne, File)
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PROVIDENCE, R.I. (AP) _ Former Red Sox pitcher Curt Schilling’s troubled video gaming company, lured to Rhode Island with a $75 million state loan guarantee two years ago, filed for bankruptcy protection on Thursday, and federal authorities have begun an investigation into the firm.

The filing by Providence-based 38 Studios, which laid off its entire staff last month, was made in U.S. Bankruptcy Court in Delaware, where the company is incorporated as a limited liability corporation. Its sister operation in Baltimore also filed for bankruptcy.

The Rhode Island company owes $150.7 million and listed its assets at $21.7 million, according to court filings. 38 Studios Baltimore owes more than $121.4 million and has assets of more than $335,000, the filings show.

In both filings, the firm lists its biggest liability as $115.9 million in debt from bonds backed by the state, interest on the bonds and fees to Rhode Island.

Schilling owns 83 percent of the company, according to the filings.

Jim Martin, a spokesman for the U.S. attorney in Rhode Island, said his office had been in contact with the FBI and state police but didn’t say exactly what it’s investigating.

38 Studios was lured to Providence from Massachusetts in 2010 when Rhode Island officials offered a $75 million loan guarantee they said would bring hundreds of jobs and millions of dollars in tax revenue. The state is likely to be on the hook for some of the company’s debts.

In a statement, 38 Studios said the company tried for weeks to find a way to stay afloat but concluded bankruptcy was the only option.

“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 statement said.

Schilling did not immediately respond to a message left for comment.

The firm last month laid off nearly 300 employees in Providence and more in Maryland. That move came after 38 Studios was more than two weeks late on a $1.1 million payment to the state _ the first indication, state officials have said, that the firm was in financial trouble.

Christine Hunsinger, a spokeswoman for Gov. Lincoln Chafee, on Thursday described the filing as expected.

“He was well aware that this was one of the possible outcomes,” she said.

Hunsinger said she didn’t immediately know what impact the company’s bankruptcy filing would have on the state.

The state government recently selected an outside auditor to review the finances of Schilling’s company.

Judy Chong, a spokeswoman for the Rhode Island Economic Development Corp., whose board approved the loan guarantee in 2010, did not immediately return a message seeking comment.

The executive director of the agency, along with several board members, resigned last month after the company’s troubles came to light.

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Associated Press writer David Klepper contributed to this report.

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